AI-powered strategy used for investing

In the past, foreign institutions investing in China relied on experienced "China hands" familiar with the country's economic policies and market dynamics, but the industry is now turning to new solutions.

Several international asset management firms have started integrating AI into their investment research processes for the Chinese market.

For example, hedge fund giant Bridgewater Associates recently posted a job opening for a "Chinese Policy AI Research Associate". The New York-based position requires candidates to be fluent in Mandarin, have a strong understanding of China's government structure and AI ecosystem, and be familiar with how AI and large language models work.

The role offers an annual salary ranging from $160,000 to $225,000.

Greg Jensen, the firm's co-chief investment officer, once said that the company has the potential to change the hiring strategy and composition of staff to include more data scientists.

Beyond job openings, Bridgewater has stepped up efforts in recent years to leverage AI for market forecasting and profitability. In 2023, it set up the Artificial Investment Associate Lab to transition its entire investment approach to machine-learning techniques. The following year, it launched a fund that relies primarily on machine learning for its investment decisions.

Bridgewater is not alone in the AI endeavor. Many global institutions are also applying the "AI+investment" strategy when engaging the Chinese market.

US asset manager BlackRock has developed a Systematic Active Equity strategy that integrates alternative data and AI.

The approach uses AI in two ways. First, to parse text from news, social media and research reports to gauge market sentiment and identify subtle changes in corporate fundamentals; and second, to reassess the importance of these hundreds of clues, allowing investment strategies to respond more quickly to the market changes, said Wang Xiaojing, a chief investment officer at Black-Rock who oversees equity, multiassets and quantitative investments.

BlackRock has already developed a globally scaled model fully driven by machine learning. However, the adoption of this model in strategies for the Chinese market remains limited, and only at an early stage, Wang said in an interview with China Securities Journal.

Using AI for macro-level analysis is not new in the industry, according to Guangzhou-based Xuanyuan Investment. Highlighting the future impact of AI on investment research, the company predicts that AI will take over primary tasks such as data sorting and be used to boost research efficiency, while human-machine collaboration becomes the norm.

Business insiders believe the shift from relying on "China hands" to algorithms indicates that foreign giants are intensifying their AI-driven investment research. This is not only because of the industry trend of embracing AI, but also due to the growing importance of the Chinese market.

Several global investment giants have expressed optimism about the overall performance of Chinese assets in 2026 in their annual outlook reports, highlighting that the long-term growth rationale for China's technology sector remains solid.

Zhang Xiaomu, a fund manager at Fidelity, believes that Chinese growth stocks will outperform during the first three quarters this year, and sectors like AI, aerospace, low-altitude economy and innovative consumer goods will show strong performance.

Xinhua - China Daily