AI pivot backfires for China's star fund managers as tech stocks wobble
Star value investors dumped consumer stocks for AI chips — then lost 28% in a month.
Chinese fund managers known for value investing have been badly burned by a late pivot into AI stocks. Liu Yanchun's fund at Great Wall Invesco Fund Management lost 28% of its net asset value in July after loading up on optical transceiver maker Zhongji Innolight, Konfoong Materials International, and other semiconductor-related names during the second quarter. The fund also cut long-held consumer and pharmaceutical positions, and added a co-manager in May — a move investors interpreted as steering the portfolio toward tech. Meanwhile, E Fund Management's Zhang Kun, once manager of mainland China's largest equity mutual fund, saw his flagship fund fall 1.2% in July after shifting into AI. The losses came as mainland-listed technology stocks recorded their steepest monthly decline in July, part of a global unwinding of AI bets fueled by skepticism over cloud infrastructure investment returns.
The episode highlights a classic case of buying at the top. The fund managers, driven by fear of missing out on the AI frenzy, piled into tech names at elevated valuations just as momentum stalled. At the same time, the consumer stocks they abandoned rebounded, compounding their underperformance. The broader signal: even seasoned investors are not immune to AI mania, and the divergence between AI hype and actual returns on cloud capital spending is now forcing a hard reckoning across global markets.
- Liu Yanchun's Great Wall Invesco fund lost 28% in July after buying Zhongji Innolight and Konfoong Materials.
- Zhang Kun's E Fund flagship equity fund fell 1.2% in July following his pivot to AI in Q2.
- Mainland Chinese tech stocks had their worst monthly drop in July as consumer stocks rebounded.
Why It Matters
Even elite value investors are vulnerable to AI FOMO, signaling broader risks as cloud infrastructure ROI doubts grow.