Spooked by bubble risks in US AI, investors are redirecting capital east. Global funds are piling into Chinese AI and tech stocks as concerns grow over stretched valuations and the “circular” financing dynamics underpinning Wall Street’s AI boom, Reuters reports.

**Missed our primer on why investors are spooked about the self-inforcing loop of AI spending in the US — where Big Tech funds AI startups that then pay the same firms for cloud and compute? You can find it here.

China is emerging as the alternative wager: Foreign investors are leaning into Beijing’s push for AI self-reliance, backed by state funding, faster approvals, and domestic supply chains. Capital is flowing into Chinese chipmakers, cloud firms, and platform companies tied to local AI deployment, the newswire said.

Flows are already shifting: Asset managers including Ruffer told Reuters they have capped exposure to the US “Magnificent Seven” while adding Chinese tech. Chinese AI chipmaker MetaX Integrated Circuits, founded by former AMD executives, soared 700% in its Shanghai market debut last week, while larger rival Moore Threads rose 400% on its debut earlier this month.

Valuations add fuel to the rotation: The Nasdaq trades at roughly 31x earnings, compared with about 24x for Hong Kong’s Hang Seng Tech Index, offering cheaper AI exposure via names such as Alibaba, Tencent, Baidu, and SMIC, the newswire noted.

Structural benefits favoring China also form part of the appeal: “Big Short” investor Michael Burry warned the US risks losing the AI race if it continues to rely on Nvidia’s power-hungry chips, arguing China’s far larger and faster-growing electricity generation gives it a structural edge, Business Insider reports. In his view, the AI arms race is being fought on power infrastructure as much as silicon.

MARKETS THIS MORNING-

Most Asian markets have made marginal gains in early trading this morning, ahead of an early close in light of Christmas Eve. Meanwhile, Wall Street is having a jolly time this holiday season, with the S&P 500 closing at a record high yesterday, though futures are hovering near the flatline.

EGX30

41,419

+0.8% (YTD: +39.3%)

USD (CBE)

Buy 47.47

Sell 47.60

USD (CIB)

Buy 47.48

Sell 47.58

Interest rates (CBE)

21.00% deposit

22.00% lending

Tadawul

10,595

+0.4% (YTD: -11.9%)

ADX

10,057

+0.2% (YTD: +6.8%)

DFM

6,161

+0.1% (YTD: +19.5%)

S&P 500

6,909

+0.5% (YTD: +17.5%)

FTSE 100

9,889

+0.2% (YTD: +21.0%)

Euro Stoxx 50

5,749

+0.1% (YTD: +17.4%)

Brent crude

USD 62.38

+0.5%

Natural gas (Nymex)

USD 4.44

+0.6%

Gold

USD 4,536.30

+0.7%

BTC

USD 87,593.70

-1.1% (YTD: -6.8%)

S&P Egypt Sovereign Bond Index

983.96

+0.2% (YTD: +26.5%)

S&P MENA Bond & Sukuk

151.63

-0.1% (YTD: +8.4%)

VIX (Volatility Index)

14.00

-0.6% (YTD: -20.1%)

THE CLOSING BELL-

The EGX30 rose 0.8% at yesterday’s close on turnover of EGP 5.8 bn (7.0% above the 90-day average). Regional investors were the sole net sellers. The index is up 39.3% YTD.

In the green: Misr Cement (+4.8%), Ibnsina Pharma (+3.3%), and Abu Qir Fertilizers (+2.5%).

In the red: Raya Holding (-3.0%), Qalaa Holdings (-2.9%), and Emaar Misr (-2.0%).

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