南方财经全媒体记者 袁思杰 孙迟悦 香港报道

"The support for US exceptionalism has weakened since the beginning of this year," said Aidan Yao, Senior Investment Strategist for Asia, Amundi Investment Institute, in a recent interview with our reporters.

Yao observed that market sentiment regarding the US dollar and US equities has declined to its most bearish level in two decades, reaching lows not seen since 2005. Capital appears to be continuously rotating out of dollar assets into European markets and emerging economies.

According to data from Lipper Funds, a subsidiary of the London Stock Exchange Group, European equity funds attracted over $100 billion in net inflows in the first half of 2025, triple the amount recorded during the same period last year. In contrast, capital outflows from U.S. markets more than doubled to nearly $87 billion.

Yao further elaborated that the US economy clearly has slowed and is no longer an exceptional performer on the global stage. In innovation, the long-standing monopoly of the "Magnificent Seven" US tech giants in AI investment has also been broken.

When discussing the development of China's AI sector favored by international institutional investors, Yao specifically highlighted the rise of DeepSeek as as indicative of the AI sector entering a "multipolar" competitive landscape. Several Chinese tech giants have now achieved significant breakthroughs in large language models (LLMs), with China surpassing the US in the number of LLMs released.

Yao noted that while the gap in foundational technologies between China and the U.S. is gradually narrowing, the U.S. still holds a clear edge in ecosystem development and global influence. However, the American model tends to be more closed and comes with high-cost barriers. This has reinforced the dominance of the "Magnificent Seven" tech giants, which are able to operate using expensive, proprietary technologies. In contrast, the Chinese approach, exemplified by open-source platforms like DeepSeek, offers significantly lower costs and greater accessibility.

Annalisa Usardi, Senior Economist, Head of Advanced Economy Modelling, Amundi Investment Institute, cautioned investors about significant future market volatility. She recommended maintaining a neutral-to-underweight stance toward the US equities given their stretched valuations.

Annalisa further expressed a preference for European financials, industrial equities, and small-to-mid-cap shares. These sectors not only benefit from the European Central Bank's rate-hiking cycle but also are relatively more resilient against trade issues.

Erosion of "U.S. Exceptionalism"

Southern Finance: Given the ongoing weakness of the US dollar and volatility in dollar assets amid multiple uncertainties, is investor confidence in "US Exceptionalism" gradually fading?

Aidan Yao:We do think that the support for US exceptionalism has weakened since the beginning of this year. If you look at surveys of institutional investors, the views towards the US dollar have now dropped to the lowest in 20 years, since 2005.

If you look at the institutional investors' position towards the US equity, they have also turned underweight, and underweight has been growing since April of this year. If you look at the degree of a rotation of institutional money, they have been moving out of the US dollar, US equities, to European emerging markets, and so on.

Coming back to a more fundamental level, why I think that it is an erosion of US Exceptionalism, I would have sort of characterized exceptionalism based on three pillars: exceptional economy, exceptional policy (particularly on the fiscal side), and exceptional innovation (AI development).

All three of these pillars of exceptionalism have weakened since the beginning of this year. The US economy clearly has slowed and is no longer an exceptional performer on the global stage. US policies have turned from a generally supportive market under Joe Biden to hurting the market under Trump, whether that's tariffs hurting the economy and therefore corporate earnings and equity, or tax cuts arousing people's concerns about fiscal sustainability. And that's weighing on bonds, and the constant threat to Fed independence is eroding the credibility of the US dollar as well.

In the space of innovation, for a long period, the Magnificent Seven was the only AI gaming income. If you want to play AI, you have to use only seven stops. But that's no longer the case. Given the rise of DeepSeek, people now have alternatives. They have other options.

And not just DeepSeek, but multiple Chinese tech firms have achieved breakthroughs in large language models. So the number of LLMs since DeepSeek from China has outnumbered that.

There is still a gap in the quality of technology, but that gap is certainly narrowing. So if you think these are the three major pillars of exceptionalism, economy, policy, and innovation, we are seeing an erosion of those supports over the recent months. Institutional money is turning more negative. I think there are fundamental rationalities why they are turning there.

Bullish on China's AI Development and Domestic Demand

Southern Finance: As a global asset manager, how has your perspective on China’s market evolved? Which sectors command your strategic focus?

Aidan Yao: In terms of overall equity market view, we are neutral.

However, we do see two major themes that are playing out. And we think that they will continue to play out in the future months and quarters, one of which is the AI thematic, the mega tech thematic in offshore China. We know that DeepSeek is a moment because it's such a game-changer. It's fundamental when you change the competitive landscape in the overall AI development. The US techs are no longer dominating and monopolizing AI development.

If you look at the Chinese tech firms, the valuations are cheaper compared to their US counterparts. And if you also think about the other elements of the technology, particularly AI development, one of which is the value creation, it may gradually go from an infrastructure upstream to downstream software. And now, multiple Chinese tech firms are not weak competitors in the downstream application field.

Second, AI as a technology requires a carrier. Right now, it's a phone or computer. That's how you access AI technology. But going forward, as technology becomes more sophisticated, you are going to need more sophisticated carriers as well. Robots or humanoids, smart cars, and drones. So, that means you have to connect your manufacturing capability with AI technology.

And if you overlay China's Hang Seng tech index and non-tech index since the rise of Chat-GPT, you will see China's stock performance following the back divergence in the US tech versus non-tech performance. That tells you very clearly that among the 20-something year-to-date gain of the Hang Seng index, a lot of which has been driven by technology.

As for the technology field, corporate earnings, large language models, and technology progression, all of which are going to continue to nurture foreign investors' confidence in China. So we like the AI theme in China. That's mostly in H-shares.

And we think that in the second half of the year, we will inevitably see another round of fiscal monetary policy easing. In A-shares, we like more domestically oriented sectors that are more connected to fiscal and monetary policy stimulus.

Annalisa Usardi：China is a big market that is very well interconnected with the Asian, let's say, supply chains for AI. So everybody looks at this investment theme. And it's going to be a long-lasting point for investors.

So if we're going to see the improvement and the strengthening of structure like the strengthening of the domestic demand, and no longer just the reliance or strong reliance on export that so far has been a strong driver of growth, which I think is going to be an important game changer for the way investors look at the Chinese economy and investment. So I think that the rebalancing is a long-lasting theme that is still in investors' minds, and that's the key.

China's Technological Advancement Accelerates

Southern Finance: Is China's investment potential in digital infrastructure and AI applications underestimated? Could you share your thoughts from the perspective of large models and industrial digitalization?

Annalisa Usardi: The idea is that AI can be a booster for productivity, and boosting productivity can improve growth in the medium and also long term. We found that fundamentally there are three aspects:

The first one is infrastructure, and not just physical infrastructure. Countries need energy production infrastructure and access to tools like iPhones and so on. But at the same time, you also need the human infrastructure, meaning human capital and the capacity for education. The second point is the environment in which the country is living this technological advancement. So if the environment is competitive and provides easy financing for startups and new projects, it's an environment that fosters stronger innovation and greater productivity. And the third point is regulation.

The way we are assessing China specifically is that it is at a very good point across all three aspects. For instance, according to the statistics we've found, China has a much higher number of STEM (Science, Technology, Engineering, and Mathematics) graduates than any other country in the world.

In addition, China is also among the global leaders in terms of academic research output, with several universities leading in scientific publications. According to the Nature Index, seven out of the world's top ten universities for publications in fields such as chemistry, chemical analysis, and earth and environmental sciences are based in China.

Southern Finance: What global comparative advantages does China possess in specific areas of AI?

Annalisa Usardi: I came across a nice article about autonomous taxis, which is an interesting entry point into the broader field of autonomous driving. There's also facial recognition and healthcare support—these are areas where our analysts have identified certain leadership and competitive advantages for China. In addition, in academic research, Chinese universities have demonstrated strong performance in fields such as chemical analysis and Earth sciences.

Aidan Yao: When it comes to foundational technology, China may still be lagging behind the U.S., although the gap is gradually narrowing. But if you look at the broader ecosystem and the sphere of influence, the U.S. model is more advanced—yet it's also closed and very expensive. That's why the Magnificent Seven are the dominant power: they're the richest firms and can afford to operate using this kind of high-cost technology. In comparison, DeepSeek in China is open-source and much more affordable.

Southern Finance: Do you think the growing AI competition between China and the U.S. could further worsen fragmentation in the global tech supply chain? What impact might this have on the globalization of Chinese technology companies?

Annalisa Usardi:We are definitely going to see some degree of fragmentation, as tariffs are clearly disrupting global supply chains. So this is going to make production less efficient.

But we think that the supply chain in Asia is very much integrated, and that still plays a role in China's AI development. I think Asia has strong capabilities in AI and tech manufacturing, and that will continue to represent an element of resilience in some way.

Aidan Yao: My own take is that fragmentation is probably not going to slow down. It might even speed up the whole process of internationalization or globalization, because China is developing its own industries, including technology, very rapidly.

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