Andrew Mattock, portfolio manager at Matthews Asia, believes investors wanting stronger artificial intelligence exposure should deliberately consider China. He warns that broad emerging-market funds may not offer sufficient access to Chinese AI firms.
Mattock notes South Korea and Taiwan make up nearly half of the iShares MSCI Emerging Markets ETF, limiting China’s AI representation in such broad products. He also remarks that common China-focused ETFs might lack desired AI stock concentration.
His Matthews China Fund invests at least 80% in Chinese companies, holding major tech giants Tencent and Alibaba among its largest positions. The fund declined about 4% year-to-date as of Friday, showing that China technology exposure entails market volatility.
This renewed China focus comes amid rising interest from major investors. Hedge-fund billionaire David Tepper said in September 2024 that he increased holdings in diverse China-related investments. Meanwhile, KraneShares CIO Brendan Ahern emphasized managing sharp swings in Chinese markets, noting options strategies on China ETFs like the KraneShares CSI China Internet ETF, which also features Tencent and Alibaba prominently.
The article highlights that broad emerging-market exposure often falls short for AI investors seeking meaningful Chinese company access. A targeted China approach may provide stronger entry to the country’s AI and tech sectors but brings notable volatility. With its expanding AI capabilities, major tech firms, and huge domestic market, China remains a key part of the global AI investment landscape, according to Mattock.
