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Chinese hedge funds stay with AI bets after a sharp downturn

September 29, 2026 at 05:20 EDT

Finance

Chinese hedge funds that placed large bets on artificial intelligence this year are largely staying with the trade after a sharp downturn, even as managers say they still have concerns. The most bullish of seven firms whose investor letters were reviewed told clients the pain had ended, at least for now, Bloomberg News reported on September 29, 2026.

September 29, 2026 · Hedge funds

Still in the AI trade

Chinese hedge funds that bet heavily on artificial intelligence are largely holding on after a sharp downturn. The most bullish of seven firms say July marked the bottom. They still have concerns.

July losses, same month

Column height is the percentage decline. Quant stock funds fell much harder than macro funds or the broad market.

17%

Long-only quants

7.9%

CSI 300

7.3%

All hedge funds

3.5%

Macro funds

Takeaway: Long-only quants lost nearly five times as much as macro funds in the same month.

Investor letters in the latest review

>10bn

Yuan managed by most of those funds

Of 1,300-plus quant products that gained

2.6tn

Yuan in China's quant industry

Why some are staying

Chaser says July was the cycle low. Intewise says the correction is probably over. Earlier letters called the hardware rally a function of real earnings, not a 2000-style bubble.

Why it is not an all-clear

The funds still list concerns. Hunjin has already set exit triggers. Wealspring and Banxia have called the AI rally a bubble, citing valuation and revenue risk.

The bottom call is the bullish end of the sample.

Seven letters, not the whole industry. The funds are holding the AI trade, and several have already written the conditions that would make them sell.

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