Chinese Public Funds Lose Over 20% as Tech Stocks Plunge in July

Active public equity funds in China that shifted heavily into technology, media and telecommunications (TMT) stocks during the second quarter faced sharp losses as the sector rebounded sharply in July. The average TMT weighting of these funds rose from about 7% at the end of Q1 to more than 55% by the end of Q2, with some funds positioning over 80% of their net asset value in semiconductor and AI‑related stocks such as SMIC and Jiangfeng Electronics. When the technology index fell 25% to 30% in July, the affected funds recorded average net‑asset‑value declines of over 20%, and twelve funds fell more than 40% in a single month.

Prominent managers such as Zhang Kun of EasyFund Blue‑chip Selection reduced holdings in traditional consumer staples like Kweichow Moutai while adding high‑growth semiconductor names. Similar rebalancing was seen at funds managed by Liu Yanchun of Invesco Great Wall and Zhu Shaoxing of Fortune Guo. New funds launched in June that built large positions at the sector’s peak also saw unit prices drop by roughly 45% to 50% since inception. The episode highlights the risk of concentrated bets in a rapidly rotating market and raises questions about risk‑management practices among China’s public‑fund industry.