The volatility of capital markets is a constant presence, with some investors chasing fleeting trends while others anchor themselves in the depths of fundamental analysis. One such individual firmly rooted in long-term perspectives is Xu Shaobo, Deputy Director of Equity Investments at Bosera Asset Management. With a 15-year investment career that spans both public mutual funds and Qualified Foreign Institutional Investor (QFII) capital management, Xu has navigated the dance of bull and bear markets, maintaining a steadfast commitment to long-term value investing even amidst turbulent market conditions.

As the landscape of artificial intelligence (AI) reshapes the competitive arena and advancements in hard technology circulate with increasing vigor, Xu’s investment approach remains notably steady and calculated. He possess the ability to gaze five, ten, or even more years into the future, with an understanding of value that is deeply rooted in the core fundamentals of companies rather than mere stock price fluctuations. Recently, Xu shared his investment philosophy and perspectives on market trends during an exclusive interview with a leading Chinese financial newspaper.

Reflecting on the past, Xu's journey began in 2005. He graduated with an MBA from Tsinghua University and commenced his professional path as a researcher at China Postal Fund, focusing on industries such as steel, non-ferrous metals, and coal. This marked the beginning of a significant career in fund management. His transition to Harvest Fund in 2008 and subsequent joining of Bosera Fund in 2015 saw him manage several public mutual fund products, further solidifying his reputation as a long-term investor.

For Xu, investing with a long-term mindset transcends the annual performance metrics typically emphasized in financial circles. He prefers to extend the timeframe for assessing returns to a range of three to five years. He argues that investors must look beyond short-term market fluctuations and concentrate on the fundamental performance and long-term value of companies. This requires deep research into targeted investments, identifying core competencies, and understanding an industry’s position rather than being swayed by market sentiment.

As a long-term investor, Xu approaches buying and selling decisions with specific criteria. He emphasizes two factors when assessing buying opportunities: the "bottom of the industry cycle" and the "bottom of the company's fundamentals." Notably, he does not overly fixate on whether a stock's valuation is at a low point, stating, "My investment strategy aligns more with a growth-at-a-reasonable-price style rather than simply chasing undervalued stocks. A stock's valuation often reflects the market’s expectations of long-term return, and those that seem undervalued can sometimes harbor underlying weaknesses or risks." Xu’s approach thus strives to balance value and growth, a philosophy that echoes through his career.

However, long-term investing does not equate to an unyielding buy-and-hold strategy. Xu underscores that his selling decisions are often driven by patterns within the company and its industry's cyclical behavior; typically, stock prices peak ahead of industry cycles. Moreover, if there is a significant transition in a company's management that causes concern, he will not hesitate to exit.

In the context of the recent market dynamics influenced by elements such as DeepSeek—an AI initiative—and subsequent trends in box office performance and robotics, there has been a palpable increase in risk appetite within the A-share market. “DeepSeek has enhanced investors' risk tolerance,” Xu remarked, conveying that prior to its emergence, many domestic investors held a belief that Chinese companies lagged in AI development. The initiative has not only bolstered confidence in domestic AI progress but has also fostered optimism about the broader economic transition in China.

Xu also highlights the significance of recent discussions surrounding private enterprises in China. He elaborates, “Private enterprises occupy a critical position in the structure of the domestic economy, and the confidence of private entrepreneurs is pivotal for economic recovery. Particularly during this transition phase, these firms demonstrate significant efficiency in research and development, capturing a notable share of the internet and high-tech sectors.”

As for specific areas for investment in 2025, Xu identifies three promising directions: first, opportunities related to AI, primarily on the application layer and terminal equipment; second, the consumption sector benefiting from replacement cycles, particularly in home appliances, furniture, and automobiles; and thirdly, industries in the mid-to-upstream that exhibit favorable supply and demand structures, such as non-ferrous metals and machinery.

Amidst the current technological landscape, he notes that certain sectors seem to be overly crowded, especially within computer-related industries, media, and robotics. Nonetheless, he maintains an optimistic outlook on investments in technology over the mid to long term. Presently, the tech sector is marked by thematic investment driven predominantly by market sentiment. As orders turn into realized revenue, he anticipates that some top-tier companies’ stock prices may continue to reach new heights, showcasing substantial investment potential.

Furthermore, Xu posits that AI applications are likely to catalyze significant growth within the consumer electronics sector. For instance, if major electronic manufacturers successfully launch AI-equipped products by 2025, it could ignite a wave of product upgrades among consumers.

In the consumption realm, the current subsidy policies impacting household goods, home furnishings, and automobiles are having a substantial effect on stimulating demand, making these sectors ripe for investment. Regarding the liquor industry, despite some debates regarding shifting consumer preferences among younger generations, Xu believes that liquor, especially baijiu, retains a vital role within Chinese culture and social contexts, making it unlikely to be displaced. He predicts this sector may experience a buoyant period this year.

For specific resources, he notes that China enjoys global pricing power. Even in downturns, quality resource companies may appear undervalued, yet their fundamentals and global demand remain supportive, offering potential investment opportunities.

New vitality in the market may emerge from financial management resources. In this era of index-based investing, the influx of medium- and long-term capital continues to enhance the appeal of Chinese assets. As the market landscape evolves, a pertinent question arises: who will wield the pricing power in A-shares in the future?

Xu articulates, “Pricing power often resides with incremental capital since the inflow and outflow of these funds directly affect market dynamics.” He underscores the potential for household financial resources to become crucial incremental capital for the A-share market. Current figures show a massive scale of bank savings and financial management assets; should the A-share market return to a reasonable level of returns, there’s a likelihood that this capital could gradually flow into the securities market, injecting fresh energy.

Recently, initiatives aimed at guiding commercial insurance funds and the National Social Security Fund to increasingly participate in the market are noteworthy. Xu interprets this policy as having a positive influence on lifting market bottoms.

Regarding the movements of foreign capital, Xu expresses a composed understanding: "Foreign investors will engage whenever opportunities for profit arise, as global capital always seeks balance among major markets." He adds that, despite the recent rebound within the A-share market, the overall valuation remains comparatively low, presenting solid investment value on a global scale.