As of January 22, the public funds’ quarterly reports for 2024 have been largely disclosed, revealing the latest insights into the investment landscape of these fundsThe ten largest holdings showcase some of China's most prominent firms, with companies like Ningde Times, Tencent Holdings, and Midea Group leading the packNotably, the list now also includes the rapidly rising company Cambrian Technology, which has garnered significant attention due to its remarkable growth of 387.55% over the year, with public funds increasing their investment in Cambrian by an impressive 9.632 billion RMB in the fourth quarter of 2024.

Among these top investments, it is evident that the landscape of public fund holdings is both dynamic and indicative of broader market trendsAs of the fourth quarter of 2024, the most substantial holding remains Ningde Times, with a staggering market value held by these funds amounting to 70.722 billion RMB, followed by Tencent Holdings and Midea Group, with values of 46.858 billion RMB and 37.881 billion RMB respectively

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Other notable companies in the top ten include Kweichow Moutai, Luxshare Precision, Wuliangye, and several others, each signifying important sectors in the Chinese economy.

When examining the changes in these holdings, Cambrian Technology's significant gain stands outFund managers have overwhelmingly shifted their focus towards this company, demonstrating their confidence in the growing artificial intelligence (AI) landscapeAt the end of the fourth quarter, positive equity-oriented funds held a total of 17.762 billion RMB in Cambrian, marking a notable increase as mentioned earlierFollowing Cambrian, Xiaomi Group and Semiconductor Manufacturing International Corporation (SMIC) also saw considerable increases in investment, with additions of 8.277 billion RMB and 7.081 billion RMB respectivelyThis shift towards high-growth tech firms illustrates a broader trend as investors begin to embrace the AI revolution.

Conversely, there have also been notable reductions in certain positions

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The company Zhongji Xuchuang has experienced the greatest decrease in market value held by these funds, with a reduction of approximately 15.611 billion RMBOther companies such as Sungrow Power Supply and Zijin Mining have also faced significant cuts exceeding 10 billion RMB, indicating fluctuating sentiments in the investment community that reflect the changing tides of technology and market stability.

The trend of reallocating assets reflects an embrace of the AI sector's potentialsAI is firmly established as one of the most powerful themes driving the A-shares market in 2024, and fund managers broadly adjusted their portfolios to capitalize on opportunities within this burgeoning sectorFor instance, well-known fund manager Li Xiaoxing, who oversees the Yinhua Xinyi fund, has significantly increased stakes in several internet companies with a strong focus on AI applicationsLi's strategy exemplifies a belief that commercializing AI will heavily shape the future landscape of internet businesses.

Within the context of strong fund performances, Wang Xiaochuan's Yinhua Digital Economy A fund stands out with remarkable returns of 49.35% leading the public market

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Its portfolio at the fourth-quarter end added several key players like Doushen Education, Zhaoyi Innovation, and ZTE Corporation while significantly increasing holdings in companies like Dameng Database and Dao Tong TechnologyThese strategic shifts highlight a critical pivot towards sectors believed to benefit from AI advancements.

Another exciting evolution is seen in the DePang Xingxing fund operated by Lu Yang and Lei Tao, which solidifies its focus on AI computing powerTheir substantial investments in firms like Cambrian and Taichung Light embody a strategic play in the fast-evolving tech space while also adding new companies to their top holdings that align with their AI strategyMeanwhile, Yongying Advanced Manufacturing Smart Selection is pivoting its focus towards humanoid robotics, showcasing a diversified investment approach into emerging technologies.

As these fund managers navigate the AI landscape, they are underpinned by macroeconomic factors that promise a shift in the valuation dynamics across the entire market

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Liu Yanchun from Invesco Great Wall Funds notes that a wave of incremental policy changes introduced in late September 2024 has begun to positively impact various sectors, demonstrating signs of recovery in manufacturing indexes and consumer confidence, which bode well for future investments.

Looking ahead, fund managers express optimism about investment opportunitiesZhang Kun of E Fund highlights the rarity in finding assets that combine high quality with high dividend yields, a combination that appears to be becoming increasingly more commonMany leading companies now boast unique competitive advantages while also being well-positioned to leverage cyclical advantages and technological innovations.

As for the AI sector specifically, Morgan Stanley's fund manager Lei Zhiyong anticipates sustained investment in IT infrastructure driven by global AI initiatives, suggesting that this trend will continue to create a favorable environment for growth