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Chinese hedge funds weigh risks to AI spending cycle
Investor letters reviewed by Bloomberg covered seven Chinese hedge funds, with several citing concerns over how much investment AI requires to sustain the boom.
Chinese hedge funds that piled into AI trades are largely sticking with their exposure even after a sharp reversal in performance, Bloomberg reports. The outlet reviewed investor letters from seven Chinese hedge fund managers, who said they remain broadly constructive on AI.
Several managers argued the July sell-off likely marked the low point of the current correction. Shanghai Chaser Asset Management said the rout represented the bottom of the cycle for now, while Intewise Capital Management chairman Liu Xiaolong said the correction has probably run its course.
At the same time, the funds warned that the AI investment cycle faces growing risks, including concerns about the scale of spending needed to sustain the theme. They also flagged potential impacts on employment and the challenge of judging where capital is ultimately being deployed, according to Bloomberg.