AI boom in China: Are Chinese mid-cap stocks multibaggers in the making? This fund manager thinks so
Chinese mid-cap stocks are likely to be the next winners as companies are increasingly taking advantage of advancements in artificial intelligence, a fund manager at Ox Capital Management told Bloomberg.
“A lot of these mid-cap companies are benefiting from a rapid implementation of AI,” said Sydney-based Joseph Lai in an interview reported by Bloomberg late last month. “It’s very cheap for these companies to implement AI solutions to increase the return on interest.”
Healthcare stocks among top bets
Ox Capital Dynamic Emerging Markets Fund is especially bullish on China’s healthcare mid-caps. Top picks include orthopaedic implant maker AK Medical Holdings Ltd and medical device company MicroPort Scientific Corp.
The fund manages assets valued at AUD 800 million
(around $520 million) and returned 1.5 per cent in the three months to April, according to Ox Capital disclosure seen by Bloomberg.
Investors eye Biotech companies
Shares of Chinese biotech companies have jumped this year as investors bet big on innovation. The country’s health IT sector is also gaining traction because of AI services provided by firms such as Deepseek, which helps to improve efficiency and company performance, reported Bloomberg.
Focus shifts from big corporations to smaller firms
Lai told Bloomberg that the fund had increased its exposure to companies like Tencent Holdings and Alibaba Group Holdings ahead of US President Donald Trump’s inauguration back in January when the stocks were cheap. However, the focus has since shifted towards smaller firms.
“Chinese mid-cap stocks can outperform the large-cap stocks in the foreseeable future,” Lai told Bloomberg. “It is where you wanna be if one’s bullish on the Hong Kong or China market.”
Beyond China
Outside China, the fund is also bullish on South Korean search engine NAVER Corp, which is planning to accelerate its AI business after its founder rejoined the board. It also has holdings in Indonesian banks PT Bank Mandiri and PT Bank Negara, reported Bloomberg.
