1. Portfolio Review​

In October, our overall equity exposure increased and is now at a relatively high level. Our key investment directions remain unchanged, focusing on semiconductors, internet, cloud computing, consumer, and fintech sectors.

AI cuts across multiple sectors and remains a core focus of our portfolio. Our investments are concentrated in leading AI application players, infrastructure providers, and top-tier chip manufacturers.

2. Market Views and Investment Strategy

1. Since October, the macro environment has largely continued its previous pattern, without fundamental changes.

United States:

• The Federal Reserve cut rates by 25 bps as expected, but Powell’s hawkish tone cooled near-term easing expectations. That said, the medium-term trend toward monetary easing remains intact. The main reasons are: inflation continues to decline, the labor market is slowing, and while overall consumption remains resilient, discretionary segments (such as fast casual dining) are starting to show signs of weakness.

• Risk premia remain near their lows since 2002, and the overall discount rate is around its historical median. While the market as a whole is not cheap, valuations are still acceptable when viewed alongside fundamentals.

• The recent marginal tightening in liquidity is mainly driven by temporary factors and is not a major concern at this stage. Large-scale AI infrastructure build-out is driving higher corporate leverage, but overall balance sheets remain solid. We will continue to monitor developments closely.

China:
Q3 GDP grew 4.8% year-on-year, but exports weakened and the property sector remains sluggish. Policy support still needs to be maintained to stabilize growth. As a result, investment opportunities are mainly at the structural level rather than broad-based.

2. AI investing enters a new stage: from aggregate to structural opportunities

AI investment is entering a new phase. Annual AI capex by major model companies, hyperscalers, and large internet platforms has reached the hundreds of billions of dollars. We are increasingly focused on the sustainability and return profile of this AI spending.

For companies such as OpenAI and Meta, there is still uncertainty over whether massive, front-loaded investment can generate sufficient returns, and if projects do scale as planned, there is also a risk of temporary overinvestment.

We believe AI opportunities are shifting from aggregate growthto structural optimization. We will be more cautious about pure “beta” exposure to the AI theme and instead focus on segments with clear structural advantages.

The AI industry is evolving from a training-centric phase to one increasingly dominated by inference. Trends such as chain-of-thought reasoning, long context, multimodality, and model personalization are raising the bar for underlying infrastructure.

For example:

• Storage systemsare evolving from simply “holding data” to “participating in computation and understanding data,” simultaneously requiring higher bandwidth, lower latency, and larger capacity.

• Networks:As AI cluster sizes continue to grow, data center network architectures are upgrading rapidly. Network investment already accounts for a double-digit share of total data center capex, with further room to rise.

The expansion of AI infrastructure will continue to drive tightly integrated evolution across computing, storage, and networking. We focus on companies that have technological moats and long-term growth potential within these structural shifts.

AI applications are also a key focus area. As model capabilities mature, the industry is moving from technological breakthroughs toward real product deployment. AI’s value is increasingly reflected in better user interaction and higher efficiency. By embedding into everyday consumer scenarios and enterprise workflows, AI still has significant room to unlock value.

Recently, OpenAI launched products integrating a browser and AI assistant, and Google has continued to improve AI Mode and AI Overview—both are examples of this trend. Currently, these opportunities are mostly concentrated among AI labs and large technology platforms with advantages in model R&D, compute resources, and user ecosystems.

​​

Where Are the Opportunities?

Looking ahead, we will actively pursue new sources of alpha across AI, robotics, consumption, fintech, and emerging markets:

• AI: A critical source of medium-to-long-term alpha. By enhancing and even substituting human productivity, AI has only just begun to unlock value, with immense upside potential.

• Consumption: Lifestyle shifts toward health and self-care continue to generate new consumer opportunities.

• Fintech: Ongoing disruption of traditional finance opens new pathways for investment.

• Emerging Markets: Latin America, Asia-Pacific, and beyond offer compelling opportunities for growth.