ChatGPT mania gives a fillip to Chinese AI stocks

Shanghai — Chinese artificial intelligence (AI) stocks are the latest rage in mainland markets as the global frenzy about the Microsoft-backed vchatbot spurs speculative bets on the revolutionary computing technology.

Just two months after its launch, ChatGPT — which can generate articles, essays, jokes and even poetry in response to prompts — has been rated the fastest-growing consumer app yet. That has pushed Google owner Alphabet to plan its own chatbot service and use more AI for its search engine.

While ChatGPT is not accessible in China, mainland investors are still pumping up the shares of AI technology companies such as Hanwang Technology, TRS Information Technology and Cloudwalk Technology.

The CSI AI industry index, which includes larger capitalised companies such as iFlytek, is up about 17% in 2023, outperforming the 6% rise in the benchmark CSI300 index.

To be sure, there is no indication that these AI companies are close to pushing out a ChatGPT-like product. The closest seems to be search engine giant Baidu with plans to complete testing of its “Ernie bot” in March. Its shares surged more than 15% on Tuesday after making the announcement.

“The industry as a whole tends to first speculate on expectations before only later trading on actual results,” said Zhang Kexing, GM of Beijing Gelei Asset Management.

Shares of Hanwang, which makes products that enable intelligent interactions, jumped by their daily limit of 10% on Tuesday, the seventh consecutive session it has reached that limit since markets reopened from the lunar new year holiday, boosting prices more than 60% so far in February.

The company expects to report an annual loss for 2022 but believes it has an edge over an interface such as ChatGPT because its model can produce more precise results for clients.

Cloudwalk shares retreated 5.5% on Tuesday, but have nearly doubled in the seven trading days since the lunar new year holidays. On Tuesday, the company cautioned investors, saying its losses have deepened in 2022, it has not co-operated with OpenAI, and has generated no revenues from ChatGPT-related services and products.

Other companies that have disclosed their progress in AI technology include TRS Information Technology, and Beijing Haitian Ruisheng Science Technology. Their share prices have soared too.

The price surge has stretched valuations. TRS trades at nearly 60 times earnings, while Haitian Ruisheng’s price:earnings ratio is more than 240.

Retail investor Lu Deyong has purchased shares in TRS and iFlytek and is seeking to profit from the ChatGPT hype.

“ChatGPT is just a hot idea,” he said. However, he does not think “China can realise such a technology in the short term. For us retail investors, we prefer smaller stocks with this concept to make some quick money.” 

Reuters