U.S Investors Bet Big on China's AI Sector Despite Political
U.S. investors are plowing money into Chinese companies involved in artificial intelligence, despite growing competition between Washington and Beijing over the technology.
Investors are driving up the share prices of Chinese tech companies developing AI models and adding cash to exchange-traded funds tracking the broader tech sector in China. Venture-capital firms based in China are raising U.S. dollar-denominated funds to deploy in AI investments, and U.S. endowments that shunned China for years are weighing a return, according to fund managers.
The momentum comes as U.S. lawmakers, citing national security, are calling for tighter curbs on American capital flowing to China. Congress’s annual defense-spending authorization bill, passed by the House on Wednesday and set for final approval before Christmas, includes a section handing President Trump the power to strengthen Biden-era rules limiting U.S. investment in Chinese high-tech industries such as AI.
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Shares of Alibaba, which trades in both Hong Kong and New York, have climbed more than 80% this year, reaching their highest level in four years. The company has announced plans to spend roughly $53 billion over the next three years to expand its artificial intelligence infrastructure and advance work toward artificial general intelligence, often described as human-level AI.
While the United States remains ahead in developing the most advanced AI models and retains a clear advantage in cutting-edge semiconductor technology, Chinese firms have moved quickly to integrate AI across a wide range of applications.
Investment managers including Vanguard Group, BlackRock, and Fidelity have increased their holdings in Alibaba’s Hong Kong-listed shares this year, according to LSEG data. Other major Chinese technology companies are also benefiting from the AI push. Shares of Tencent and Baidu—both of which are deploying large language models at the center of their generative AI strategies—have gained close to 50%.
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London-based investment manager Ruffer believes publicly traded Chinese technology companies still offer meaningful upside, largely because their valuations remain well below those of comparable U.S. firms such as Alphabet. The firm points to lower price-to-earnings multiples as a key reason for its view. Ruffer manages approximately £19 billion in assets, equivalent to about $25 billion, including capital from U.S. investors. The portfolio has gained close to 11% this year, with performance partly supported by holdings in Alibaba, which accounts for roughly 1.5% of total assets, according to investment specialist Gemma Cairns-Smith.
“China plays a significant role in the AI landscape,” Cairns-Smith said, noting that Chinese tech stocks continue to trade at a substantial discount relative to their U.S. peers. As a result, she added, investors who remain on the sidelines may miss potential opportunities.
Source: The Wall Street Journal
Oil Is Piling Up at Sea, and Prices Aren't Reacting
Source: The Wall Street Journal
The global oil market is increasingly debating whether shipments from sanctioned countries such as Russia and Iran should be considered part of available supply. This uncertainty may help explain why oil prices have been slow to respond to a significant surplus accumulating at sea.
An estimated 1.4 billion barrels of oil are currently “on the water,” a level that is roughly 24% above the seasonal average observed between 2016 and 2024, according to data from energy analytics firm Vortexa. This figure includes crude that is en route to ports as well as cargoes that have yet to secure buyers.
The growing volume of offshore oil stems from several factors. Shipments from major producers have risen sharply, with Vortexa reporting a 16% increase compared with the same period last year. OPEC+ members are raising output as they gradually roll back production cuts, while additional supply is also coming from non-OPEC producers such as Brazil, Guyana, and the United States.
At the same time, exports from sanctioned countries have expanded significantly. Shipments classified as “dark” barrels—often associated with Russia, Iran, and Venezuela— have surged by 82% over the past year, with the steepest increase occurring over the last three months.
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Geopolitics is driving the trend. India and China are usually the top customers for Russian oil but have been wary of making purchases since the White House sanctioned producers Lukoil and Rosneft in October.
The U.S. also recently sanctioned a Chinese oil terminal in Shandong province that had been accepting shipments of Iranian crude. The restrictions haven’t stopped Iran or Russia from pumping oil. But it is becoming harder to find buyers, so vessels are getting trapped at sea.
The “dark” barrels are a dilemma for the market. They are too big a share of global flows to ignore—15% of the world’s oil supply is now under sanctions, according to Kpler. But with the usual buyers on strike, there is an argument that these sanctioned barrels can be discounted from estimates of available supply.
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