Are you seeing that this potentially could be a turning point in the AI investment cycle? Are we heading towards an AI bubble bursting? I think

it's good that we are seeing a correction right now because the AI financing boom was just too much.

It was crowding out everything else, right? Like if you go to investment conferences, AI and the AI data center, they are the only things that people talk about.

Even governments, sovereign governments, they are having trouble refinancing their debt.

And not to mention other sectors like real estate or retail.

Every other sector is faced with a higher cost of borrowing because of the AI boom.

Julie, where was the sell-off happening? Who's selling? I think anyone who used leverage to build big positions in the AI trade has to be selling because they have to meet margin costs and some have to cut their risk exposure.

How has the mood among investors

Are you seeing that this potentially could be a turning point in the AI investment cycle? Are we heading towards an AI bubble bursting?

I think it's good that we are seeing a correction right now because the AI financing boom was just too much.

It was crowding out everything else, right? Like if you go to investment conferences, AI and the AI data center, they are the only things that people talk about.

Even governments, sovereign governments, they are having trouble refinancing their debt.

And not to mention other sectors like real estate or retail.

Every other sector is faced with a higher cost of borrowing because of the AI boom.

Julie, where was the sell-off happening? Who's selling? I think anyone who used leverage to build big positions in the AI trade has to be selling because they have to meet margin costs and some have to cut their risk exposure.

How has the mood among

Talk to me about the positive forces that could further cement that position.

What we are seeing is a, a rebound in Hong Kong's asset management industry last year.

A lot of, uh, global hedge funds, they were opening, uh, shop in Hong Kong, and they were actually expanding their office space.

We're talking about Citadel, uh, Jane Street, uh, Point72.

Uh, one reason is that, uh, uh, they want to be close to the deep talent pool in mainland China.

For, for educated, uh, smart mainland Chinese to move to Hong Kong, it's very easy, whereas, uh, it would be very difficult for them to move to, say, London or New York.

And, uh, with global hedge funds stuck in a very heated, uh, uh, talent fight and they're paying more and more money to young analysts, they find Hong Kong quite, uh, attractive.

What could be a negative in this story?

Talk to me about the positive forces that could further cement that position.

What we are seeing is a, a rebound in Hong Kong's asset management industry last year.

A lot of, uh, global hedge funds, they were opening, uh, shop in Hong Kong, and they were actually expanding their office space.

We're talking about Citadel, uh, Jane Street, uh, Point72.

Uh, one reason is that, uh, uh, they want to be close to the deep talent pool in mainland China.

For, for educated, uh, smart mainland Chinese to move to Hong Kong, it's very easy, whereas it, it would be very difficult for them to move to, say, London or New York.

And, uh, with global hedge funds stuck in a very heated, uh, uh, talent fight and they're paying more and more money to young analysts, they find Hong Kong quite, uh, attractive.

What could be a negative in this story?

Talk to me about the positive forces that could further cement that position.

What we are seeing is a, a rebound in Hong Kong's asset management industry last year.

A lot of, uh, global hedge funds, they were opening, uh, shop in Hong Kong, and they were actually expanding their office space.

We're talking about Citadel, uh, Jane Street, uh, Point72.

Uh, one reason is that, uh, uh, they want to be close to the deep talent pool in mainland China.

For, for educated, uh, smart mainland Chinese to move to Hong Kong, it's very easy, whereas, uh, it would be very difficult for them to move to, say, London or New York.

And, uh, with global hedge funds stuck in a very heated, uh, uh, talent fight and they're paying more and more money to young analysts, they find Hong Kong quite, uh, attractive.

What could be a negative in this story?

Shuli says what worries her even more is the all-in mentality taking hold among some investors.

I heard from a teenager from Taiwan, she was saying that the saying is, uh, "Sell your house, sell your cars, and buy TSMC." That's the problem.

Until you sell your holdings, these are just paper gains that can evaporate overnight.

So the risk is that you think you are making 100% returns this year on paper.

If that return reverses, suddenly you end up with nothing.

It could possibly traumatize a new generation of investors.

What we saw after Japan's economy's bubble burst was that Japanese people have turned very cautious, right? Like if you get burned very early on in your 20s or 30s, that could really change your risk appetite and the risk attitude for decades to come.

Since the beginning of this year, foreign investors sold more than $90 billion in Korean stocks and $20 billion worth of Taiwanese stocks.

So it's quite interesting to understand your reporting about what's actually been happening there in the past four weeks and the impression that it gives you on the ground.

Right.

So Yiwu is the world's biggest small commodities wholesale hub.

And in the first two months of the year before this whole Iran war happened, exports from Yiwu actually increased 50% year on year.

following 25% increase last year.

So basically, the city was not affected by Donald Trump's tariffs at all.

But in March, vendors in Yiwu say that Middle Eastern customers who are very well sought after in Yiwu, they basically disappeared.

So what sort of debate is happening now in China about the potential effects of the war and what sort of response might there be from Beijing?

Should he be?

I think Trump needs to be a little bit more careful with what he's saying.

I mean, he always wants a weak dollar because US goods is very expensive and the US is very expensive for wealthy tourists from Europe or Japan.

But the problem is when we start to see such a clear trend of a dollar weakening, international investors will have even more incentive to sell US-based assets.

talking about Euro, right? For investors that are based in the European Union, if they bought into the S&P 500 in the last year, their Euro-based returns is actually none because the Euro has just strengthened so much against the greenback.

So going forward in 2026, say the dollar is going to weaken another, I don't know, 5%, 6%, 7% against the Chinese yuan or the Japanese yen, that is going to be a big problem.

The Asian investors will also want to start to sell America.

What does this mean for U.S. government borrowing if you have a weaker dollar?

It's been a wild ride for China this year, but as we close the book on 2025, how is China looking? What surprised you the most?

most?Just the fact that the animal spirit is starting to come back in China, that's just so surprising because we just didn't feel that way, uh, at the beginning of the year, right? Like, when you talk to global investors, what they're saying is that at the beginning of the year, there was the sense that, okay, China does have the world's most powerful factory.

It ha- it has manufacturing locked.

But if AI manages, uh, to come along and d- develop further, there's a chance that, uh, you know, in the future, all the manufacturing would- will be automated and China will lose its biggest edge.

And it turned out at the end of the year, actually, you know, China is [laughs] still the world's most powerful factory, despite Trump's tariffs.

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So then what do you think in terms of the, the broader picture? I mean, are we seeing that fundamental shift in how foreign investors are now looking at the Chinese market as well?

This year, in 2025, AI is a huge theme, and any market that doesn't have the AI exposure, they're just not going to do as well, and I'm talking about India.

But as we close the book on 2025, how is China looking? What surprised you the most? Just the fact that the

animal spirit is starting to come back in China, that's just so surprising because we just didn't feel that way at the beginning of the year, right? Like when you talk to global investors, what they're saying is that at the beginning of the year, there was the sense that, okay, China does have the world's most powerful factory.

It has manufacturing locked.

But if AI manages to come along and develop further, There's a chance that, you know, in the future, all the manufacturing will be automated and China will lose its biggest edge.

And it turned out at the end of the year, actually, you know, China is still the world's most powerful factory, despite Trump's tariffs.

What does it say about China that it's managed to clock so much progress in high tech, even as the U.S. was trying to hold it back by restricting sale of these advanced chips that they need to develop AI with?

I think the seeds of success were sowed a long time ago, and it's only by the law of large numbers that innovation comes out in China.

Let's start with higher education.

Fill me in a little bit.

He's definitely a dollar bear.

He blamed the U.S. society's various economic problems from the loss of manufacturing to wealth inequality to the overvaluation of dollar.

In a very well-read paper published last November, he basically said that the dollar is overvalued and that it should not be acting as a reserve currency.

And that's very much freaking global investors out.

Like what we are seeing is that the Fed was holding the rates.

right, throughout this year until Wednesday.

Do you think he's likely to have much in the way of influence while he's sitting on the Fed's Board of Governors?

Fill me in a little bit.

He's definitely a dollar bear.

He blamed the U.S. society's various economic problems from the loss of manufacturing to wealth inequality to the overvaluation of dollar.

In a very well-read paper published last November, he basically said that the dollar is overvalued and that it should not be acting as a reserve currency.

And that's very much freaking global investors out.

What we are seeing is that the Fed was holding the rates throughout this year until Wednesday.

but the broader dollar index has come down 12% already.

Do you think he's likely to have much in the way of influence while he's sitting on the Fed's Board of Governors?

Fill me in a little bit.

He's definitely a dollar bear.

He blamed the U.S. society's various economic problems from the loss of manufacturing to wealth inequality to the overvaluation of dollar.

In a very well-read paper published last November, he basically called that the He basically said that the dollar is overvalued and that it should not be acting as a reserve currency.

And that's very much freaking global investors out.

Like what we are seeing is that the Fed was holding the rates, right, throughout this year until Wednesday.

But the dollar, the broader dollar index has come down 12% already.

Do you think he's likely to have much in the way of influence while he's sitting on the Fed's Board of Governors?

Help me understand that.

So people are looking at 2025 versus 2015.

If we recall, 2015 was a crazy year for China's stock market.

In the first half, there was a euphoria rally, like with the benchmark index up 50%.

And in the second half, all that 50% gain was given away.

And then the Chinese government had to scramble to bring in the national team to support the stock market.

So people think that 2025 has very similar economic drop back as 2015, because just like a decade ago, the economy is in deflation.

And I'm wondering whether that could be maybe a catalyst for some difficulty in AI stocks in China.

Help me understand that.

So people are looking at 2025 versus 2015.

If we recall, 2015 was a crazy year for China's stock market.

In the first half, there was a euphoria rally, like with the benchmarking that's up 50%.

And in the second half, all that 50% gain was given away.

And then the Chinese government had to scramble to bring in the national team to support the stock market.

So people think that 2025 has very similar economic drop back as 2015, because just like a decade ago, the economy is in the deflation.

And I'm wondering whether that could be maybe a catalyst for some difficulty in AI stocks in China.

Can we begin by having you give me a sense of scale here, perhaps a few examples of how biotech in China is advancing?

Well, the revelation came really just a month ago when Pfizer agreed to pay a record $1.25 billion upfront to license an experimental cancer drug from a Chinese company called 3S Bio.

Two weeks later, Bristol BioSquib said it will pay BioNTech another $1.5 billion to license a similar cancer drug.

And that cancer drug was an acquisition from BioNTech.

That cancer drug was bought by BioNTech from a Chinese company just late last year for $800 million.

So what we are seeing is that big pharma are paying billions of dollars licensing Chinese drugs.

When you look at the way in which some of these stocks have been performing, perhaps on the mainland or in Hong Kong, have they been doing remarkably well?

remarkably well.

What's happening here?

Yeah, it's ironic, right? Because you imagine Hong Kong being a part of China will be caught in this U.S.-China trade war.

It's a major re-exporter of Chinese electronic goods.

And, you know, Hong Kong has a lot of political issues.

The 2019 pro-democracy movement didn't pan out very well.

And there are a lot of political dissidents there.

So it has been on the bad side of the United States.

When you talk to people in Hong Kong about the weakness on the mainland, what are they saying? Are they optimistic that things will begin to turn around and maybe Hong Kong can benefit from a resurgence in Chinese growth?

And Shuley says other companies are already trying to replicate parts of PopMart's formula for success when they're expanding

abroad.

Chinese companies all want to go overseas.

Overseas, profit margins are just much higher compared to China.

And there is no price wars in big markets like the US and the European Union.

And in fact, you start to see this brand called Miniso, the Chinese version of Muji, if I may use that analogy.

And they are also selling toys, cheap lipstick, houseware, et cetera, right? And that they are trying to do what PopMart is doing, going overseas.

Just as importantly, PopMart is challenging the idea that China is just a place where cheap knockoff goods are made.

And Shuley says other companies are already trying to replicate parts of PopMart's formula for success when they're expanding

abroad.

Chinese companies all want to go overseas.

Overseas, profit margins are just much higher compared to China.

And there is no price wars in big markets like the US and the European Union.

And in fact, you start to see this brand called Miniso, the Chinese version of Muji, if I may use that analogy.

And they are also selling toys, cheap lipstick, houseware, et cetera, right? And that they are trying to do what PopMart is doing, going overseas.

Just as importantly, PopMart is challenging the idea that China is just a place where cheap knockoff goods are made.

Are you buying it?

I mean, there is the sense that the basis trade, hedge funds unwinding basis trade, created some turmoil in the treasury market.

But I think what Treasury Secretary Benson said, he cited the tick data, basically.

It's data released, provided by his own department.

I think that's only part of the picture because this data collects information from U.S. custodian banks.

So say I was a China central bank, my holdings with U.S. custodian banks will be disclosed in the treasury data.

But I can also have treasury holdings with European custodian banks in Europe, say in Belgium, with Euroclear.

And I'm just wondering how effective the Trump administration can be in these trade negotiations with this sword of Damocles kind of hanging over its head.

Is this going to continue for a while longer, or is there a concern that is developing that maybe things have come too far too fast?

I think it's both.

People think that the AI theme in China is not just a three-month thing.

It has been only just not even three months in China.

It will continue on.

But the rally has been quite fast.

So you will see some people taking profit.

So if we can use AI as a metaphor for some of the gains that we have seen in automation, in mechanized handling of certain processes, and in robotics as well, is there a risk for the overall economy in China, particularly if you start to consider Chinese workers?

Is China buying

any of that? I think China has realized that the U.S., Trump is serious about rebalancing the economy.

I mean, before it worked very well, right? U.S.

is the big consumer, China is the big producer.

China sells products into the U.S., and then with the trade surplus, they in turn buy U.S. treasuries.

It worked very well.

And Trump just doesn't want that.

But in the end, can these tariffs really break China's grip on manufacturing at this point, Shuli? You

How would you describe what's been happening with Chinese tech right now?

Well, Deep Seek really has changed the perception of Chinese investors.

They do feel, I mean, going back, like we know that Hong Kong listed shares, mostly Chinese companies, right? They are deep value traps.

After Beijing's regulatory crackdowns on big tech and the whole property bubble burst, like the Chinese shares are very cheap.

But Deep Seek basically said that, you know, China is not just a manufacturing powerhouse.

It's also good with software and digital stuff, right? Like Deepsea does generative AI.

And people didn't really expect that a small unknown startup, even to the Chinese until a month ago, could do so well despite all the export controls.

And I'm wondering whether you're really focused on a lot of these e-commerce names that we hear so much about, like Alibaba, Tencent.

How would you describe what's been happening with Chinese tech right now?

Well, deep-seek really has changed the perception of Chinese investors.

They do feel, I mean, going back, like we know that Hong Kong listed shares, mostly Chinese companies, right? They are deep value traps.

After Beijing's regulatory cracked down some big tech and the whole property bubble burst, like the Chinese shares are very cheap.

But deep-seek basically said that, you know, China is not just a manufacturing powerhouse.

It's also good with software and digital stuff, right? Like Deepsea does generative AI.

And people didn't really expect that a small unknown startup, even to the Chinese until a month ago, could do so well despite all the export controls.

And I'm wondering whether you're really focused on a lot of these e-commerce names that we hear so much about, like Alibaba, Tencent.

How would you describe what's been happening with Chinese tech right now?

Well, Deep Seek really has changed the perception of Chinese investors.

They do feel, I mean, going back, like we know that Hong Kong listed shares, mostly Chinese companies, right? They are deep value traps.

After Beijing's regulatory crackdowns on big tech and the whole property bubble burst, like the Chinese shares are very cheap.

But Deep Seek basically said that, you know, China is not just a manufacturing powerhouse.

It's also good with software and digital stuff, right? Like Deepsea does generative AI.

And people didn't really expect that a small unknown startup, even to the Chinese until a month ago, could do so well despite all the export controls.

What do you see when you look at some of these companies, Chinese firms that trade in Hong Kong?