China Emerges as New Hub for AI Investing Amid Korean and Japanese Rotations

Investors are shifting their focus from South Korea and Japan to China as the AI trade becomes increasingly crowded and expensive. According to Barclays and UBS, clients are buying derivatives linked to China's CSI indexes due to the declining popularity of the Korean Kospi index.

The CSI 300 and CSI 500 indexes have seen a surge in bullish bets from institutional investors, with UBS pointing out that the CSI 500 is an attractive alternative to mid- and small-cap Chinese firms exposed to Beijing's domestic chip and hardware self-reliance efforts.

Barclays is also seeing interest in call spreads on onshore Chinese indexes, with clients positioning for a gradual increase rather than a sudden surge. Value Partners, one of Asia's largest fund managers, has begun selling Taiwanese and South Korean AI holdings to buy more Chinese hyperscalers listed in Hong Kong.

The trend is not limited to traditional financial markets; some investors are also turning to crypto-native venues such as Trade.xyz, which offers perpetual futures contracts on individual Chinese AI names like ChangXin Memory Technologies (CXMT).