How China’s young managers grappled with billion-yuan mandates as AI shocks hit portfolios

China’s young portfolio managers were thrust into the spotlight after a global correction in artificial intelligence stocks triggered 50 days of market turmoil in June. The sell-off damaged technology-heavy portfolios and forced even seasoned investors to answer difficult questions from clients. The shock echoed the experience of Leopold Aschenbrenner, whose US hedge fund saw assets wiped out by more than two-thirds in a single month. In China, the reversal exposed the risks of managing large pools of capital while relying on technology shares that had risen sharply earlier in the year. Yuan Zeqiang, who had three and a half years of sell-side research experience, saw his two debut portfolios at Caitong Fund Management fall 36 per cent and 33 per cent, respectively, between his appointment on June 11 and July 30, according to market data. Yuan took over both products from the outset. At the end of the second quarter, they held combined assets of 7.28 billion yuan (US$1.08 billion), an unusually large mandate for a first-time manager. The rapid drawdown stemmed from his heavy exposure to technology stocks, which retreated after their earlier gains. The losses intensified debate over whether the artificial intelligence boom could be sustained. Nevertheless, Yuan remained confident in his second-quarter report, published on July 21. He wrote that domestic optical communications “still held upside potential” and that printed circuit board values would rise significantly. Yuan’s experience illustrates how concentrated positions and large mandates can magnify the consequences of a sudden market reversal. It also highlights the pressure on new managers in China’s competitive fund industry, where investment views can quickly become subject to close client and market scrutiny.