E Fund CIO Jeff Li Flags China EV, AI Value Beyond Market Turmoil
1h ago|4 min readStandard
Fazen Markets Editorial Desk
Collective editorial team · methodology
china marketsinvesting strategy
Fazen Markets Editorial Desk
Collective editorial team · methodology
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Jeff Li, Chief Investment Officer for Global Equity at E Fund China Confidence on Capital">Hong Kong, highlighted specific investing opportunities within China's structural economic transition at the Bloomberg Invest 2026 conference in Hong Kong. Li identified the electric vehicle ecosystem and domestically-focused artificial intelligence as key value areas. He argued these sectors are positioned for durable growth exceeding 15% annually, despite prevailing market turbulence. Bloomberg reported the comments from the June 10 conference in Hong Kong.
China's stock markets have traded at depressed valuations compared to global peers for several years. The MSCI China Index traded at a forward P/E of 10.5 in early June 2026, a discount exceeding 40% to the MSCI USA Index. Persistent concerns over property sector debt and geopolitical friction have suppressed foreign capital inflows.
Li's intervention arrives as China's policymakers intensify support for high-tech manufacturing. The "New Productive Forces" initiative channels state-backed investment into advanced industries like semiconductors and new energy vehicles. This marks a deliberate pivot from the previous growth model centered on real estate and infrastructure.
The immediate trigger for reevaluating Chinese assets is a stabilization in corporate earnings. First-quarter 2026 results for major EV and battery producers showed sequential margin improvement. This suggests pricing pressures from a brutal two-year discount war may be abating, allowing profitability to recover.
China's EV sector delivered 8.1 million vehicle sales in 2025, capturing over 60% of the global market. Export volumes surged 58% year-on-year in Q1 2026 to 1.3 million units. The top three battery manufacturers—CATL, BYD, and CALB—collectively hold a 65% global market share.
Financial metrics underscore the growth. BYD reported a 21% year-on-year increase in Q1 2026 revenue to $24.5 billion. Its net profit margin expanded 90 basis points to 6.2%. In contrast, the CSI 300 Index of mainland Chinese large-caps declined 3% year-to-date through June 9, 2026.
China's AI industry is scaling rapidly. Domestic large language model developers secured over $12 billion in venture funding in 2025. Government procurement contracts for AI cloud services increased by 45% in the first five months of 2026 versus the same period in 2025.
Investment flows show a divergence. While foreign investors have been net sellers of mainland A-shares, southbound flows via Stock Connect into Hong Kong-listed tech stocks have remained positive for 14 consecutive weeks as of June 10.
Li’s focus signals a rotation from broad China market plays to specific industrial and technology champions. Direct beneficiaries include EV leaders BYD (1211.HK) and battery giant CATL (300750.SZ). AI cloud infrastructure providers like Alibaba (BABA) and Baidu (BIDU) also stand to gain from increased domestic adoption.
Second-order gains flow to suppliers. Lithium producers Ganfeng Lithium (1772.HK) and semiconductor equipment makers like NAURA Technology Group (002371.SZ) should see sustained demand. The shift pressures traditional sectors; property developers and consumer discretionary companies reliant on housing wealth face continued headwinds.
The main risk to this thesis is an escalation of international trade restrictions, which could abruptly curtail export growth for EVs and tech hardware. A sustained global economic slowdown would also dampen external demand.
Positioning data indicates global long-only funds remain underweight China but are gradually increasing exposure to these select industrial themes. Hedge funds are building long-short pairs, going long EV supply chain names against short positions in financials and real estate.
The next catalyst is China's Q2 2026 GDP report, scheduled for release on July的海. Consensus forecasts growth of 4.8% year-on-year, with a print above 5.0% likely to trigger a broad market rally.
Key levels to monitor include the 3,800 resistance level for the CSI 300 Index and the 18,000 level for the Hang Seng Tech Index. A decisive break above these thresholds would confirm a change in market structure.
The Federal Reserve's policy meeting on June 18 will influence global risk appetite and the USD/CNY exchange rate. A weaker yuan below 7.25 could provide a temporary boost to exporter earnings but risks capital outflow pressures.
Retail investors should interpret Li's comments as a roadmap for sector selection, not a blanket endorsement of Chinese equities. His analysis suggests avoiding broad index ETFs and instead focusing on actively managed funds or direct stock picks in the EV, renewable energy, and domestic technology verticals. Concentration risk is high, so position sizing must be conservative.
China's EV industry mirrors Japan's 1980s export boom in scale but operates with far faster innovation cycles. Japanese automakers took decades to achieve global dominance; Chinese EV firms have captured significant European and Southeast Asian market share in under five years. The key difference is China's integrated control of the battery supply chain, a strategic advantage Japan's auto sector never held.
Foreign portfolio inflows into Chinese equities peaked in early 2021, exceeding $45 billion in a single quarter. Since then, flows have been volatile, with net outflows recorded in eight of the past twelve quarters through Q1 2026. The current trickle of returning capital, focused on specific sectors, marks a potential inflection point from broad-based divestment.
E Fund's Jeff Li identifies high-growth niches within China's economy that are decoupling from broader market pessimism.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.
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