China Stock Rally to Cool as AI Trade Gets Crowded, Survey Shows

The recent rally in Chinese stocks may lose steam by the end of 2023, according to a survey of market participants. While artificial intelligence (AI) breakthroughs and government support policies have fueled optimism, analysts believe that stretched valuations could lead to a cooling of the market. The survey suggests that the AI trade has become increasingly crowded, reducing the potential for further gains. Investors are also concerned about the sustainability of the current market momentum, as the valuation of Chinese stocks has risen significantly in recent months. Despite these cautionary signals, the survey indicates that some investors remain optimistic about the long-term prospects of the Chinese market, particularly in light of the potential for continued innovation and policy support. However, the near-term outlook appears more uncertain, with the possibility of a market correction looming as the year progresses.