A Surge in Innovation: The Rise of “Doubling Funds” in China’s Financial Markets
In the first half of 2025, the financial landscape in China has witnessed a remarkable phenomenon: the emergence of the first “doubling fund” of the year. The fund, known as Huitianfu Hong Kong Advantage Selected A, has captured the market’s attention with an impressive 99.5% year-to-date return as of June 13, 2025. This fund, heavily invested in the innovative pharmaceutical sector, has outperformed the entire market, setting a new benchmark for investment success.
The innovative pharmaceutical sector has been a hotbed of activity, with the A-share and Hong Kong markets showing significant strength since April 9, 2025. The WIND Innovative Pharmaceutical Concept Index surged over 25%, while the Hang Seng Innovative Pharmaceutical Index soared by more than 53%. Notable companies like Shutee Pharmaceutical, Sansei National Health, and Yifang Biotechnology-U have seen their stock prices more than double, highlighting the sector’s robust performance.
However, this success story comes with a cautionary note. The leading fund managers behind these top-performing funds are relatively new to the industry, with some managing multiple products and showing a strong inclination towards popular investment themes. This trend underscores the dynamic and sometimes unpredictable nature of the market, where new entrants can quickly make their mark.
Challenges in the Tech Sector: A Cooling Trend
In contrast to the booming pharmaceutical sector, the tech industry, particularly the ChiNext 50 index, has faced a cooling trend. The index has experienced a five-day losing streak, reaching a new low since April 9, 2025. The decline is partly attributed to significant pullbacks in chip-weighted components, with companies like Hengxuan Technology and Takuang Technology seeing over 10% drops in their stock prices.
The tech sector’s downturn is further exacerbated by a broader market adjustment, with the ChiNext 50 index experiencing an 8% maximum drawdown, outpacing other indices within the ChiNext board. This cooling trend reflects a shift in investor sentiment, with capital flowing away from traditional tech giants towards more promising sectors like innovative pharmaceuticals.
AI and the Future of Technology
Despite the challenges in the tech sector, artificial intelligence (AI) continues to be a focal point for investment and innovation. The recent advancements in AI, particularly in agent-based AI, are expected to drive the next phase of technological development. The AMD “Advancing AI” conference highlighted the exponential growth in computational demands driven by AI agents, with predictions of a significant increase in inference needs over the coming years.
In China, the Shanghai Financial Regulatory Bureau and the Shanghai Science and Technology Commission have introduced new guidelines to support technological innovation, particularly in AI. These measures aim to provide a stable environment for tech companies to thrive, focusing on future industries like robotics, quantum technology, and 6G.
Investment Opportunities in AI and Semiconductor ETFs
Investors have shown a keen interest in AI and semiconductor ETFs, with significant inflows into funds like the ChiNext AI ETF and the ChiNext Semiconductor ETF. These funds have seen substantial growth in both assets and trading volumes, reflecting investor confidence in the long-term potential of these sectors.
The ChiNext AI ETF, for instance, has attracted over 797 million yuan in net inflows over five days, with its underlying index also experiencing significant capital inflows. Similarly, the ChiNext Semiconductor ETF has seen a notable increase in assets and trading volumes, underscoring the market’s optimism about the semiconductor industry’s future.
Conclusion
As 2025 unfolds, the financial markets in China are characterized by a stark contrast between the booming innovative pharmaceutical sector and the cooling tech industry. While new investment themes and sectors continue to emerge, the role of AI and semiconductors remains pivotal in shaping the future of technology and investment. Investors are advised to navigate these dynamic markets with caution, keeping an eye on emerging trends and potential opportunities.