While China’s domestic A-share markets have faced a period of relative stagnation, the country's most prominent fund managers are quietly orchestrating a high-stakes pivot toward the global semiconductor supply chain. Zhang Kun, often heralded as China’s premier stock picker and a long-time devotee of domestic consumer staples, has signaled a significant strategic shift. His flagship E Fund Asia Selection fund has emerged as a top performer by aggressively betting on South Korean tech giants Samsung Electronics and SK Hynix long before the current AI-driven frenzy reached its fever pitch.
This geographical diversification has paid off handsomely. As of mid-June, Zhang’s Asia-focused fund reported a one-year return of over 51% and a two-year return exceeding 61%. These figures stand in stark contrast to the lackluster performance of his domestic-focused products, which have struggled alongside the broader Chinese economy. The divergence highlights a growing trend among China’s institutional elite: the realization that to capture the upside of the artificial intelligence revolution, one must look toward the hardware gatekeepers of Seoul and Hsinchu.
The scale of this commitment is reflected in recent regulatory filings. By the end of the first quarter of 2024, Samsung Electronics and SK Hynix held dominant positions in Zhang's portfolio, with SK Hynix seeing an 83% increase in share count within a single quarter. This wasn't merely a speculative play but a calculated move into the memory chip architecture essential for high-performance computing. Other managers, such as those at CCB Trust and Franklin Templeton, have followed suit, with some QDII (Qualified Domestic Institutional Investor) products yielding returns as high as 90% year-to-date by bundling Korean chips with global leaders like Nvidia and TSMC.
This shift also reveals the tactical agility required to navigate modern fund management. When Samsung’s stock price surged, threatening to breach the 10% single-stock holding limit mandated for Chinese funds, Zhang executed what analysts call 'passive reduction'—selling just enough to remain compliant while simultaneously shifting that capital into SK Hynix. This maneuver suggests that the appetite for Korean semiconductor exposure remains insatiable among Chinese managers, even as they manage the risks of high-flying valuations and complex cross-border regulations.