China AI stocks sink on state media’s call to stem bubble risk
ARTIFICIAL intelligence (AI) stocks in China plunged after a state media outlet urged authorities to step up supervision of potential speculation.
The ChatGPT concept sector has shown “signs of a valuation bubble”, the Economic Daily reported on Monday (Apr 10), adding that many companies have made little progress in developing the technology.
Regulators should strengthen monitoring and crackdowns on share-price manipulation and speculation, to create “a well-disclosed and well-run market”, said the newspaper, which runs a website officially recognised by Beijing. Companies, it added, should develop the capabilities they propose, while investors should refrain from speculating.
CloudWalk Technology tumbled a record 20 per cent, while 360 Security Technology dropped by 10 per cent, the most in three years. Beijing Haitian Ruisheng Science Technology sank 15 per cent.
Since the release of ChatGPT, Chinese shares related to the technology have surged, with domestic big tech companies joining the race to develop generative AI. Last Tuesday, SenseTime Group rose the most in two months in Hong Kong, amid speculation that the SoftBank Group-backed company was developing a product to challenge ChatGPT. Shares of Alibaba suppliers also jumped, after reports surfaced that the tech giant would be unveiling its answer to ChatGPT.
Vey-Sern Ling, managing director at Union Bancaire Prive, said: “Generative AI is the hottest trend now, and many tech companies will be launching their own versions in the coming months.
“While valuations may rise to such news, the actual financial impact to these companies may be difficult to gauge at this juncture, and may lead to disappointment eventually.” BLOOMBERG
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