Zhang Kun speaks out for the first time at 4100 points: How should we view consumption, housing prices, AI, and national destiny?
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When the market is trading the current hot spots, Zhang Kun is thinking about and betting on the future "national destiny".
In the early hours of January 22, 2025, Zhang Kun's quarterly report was published online right on schedule, as always, without a single error—just like his consistent investment style.
But this quarter, his views included much more "new" content.
First, this is the first time in nearly a decade that Zhang Kun's managed products have “spoken out” above the 4,100-point mark of the Shanghai Composite Index. Faced with the 1,000-point rise over the past two years and a highly divergent market performance, Zhang Kun's views and responses are drawing significant attention.
Second, this is, in the public’s impression, the first time Zhang Kun has mentioned AI and the "AI bubble" theory. He not only frankly expressed his opinions, but also reasoned based on the logic of value investing, and commented on the performance of some Chinese companies in the AI trend.
Third, Zhang Kun rarely analyzes, from the perspective of incremental and stock elements, the future trends of crucial aspects in our country such as the economy, consumption, and real estate, with many judgments and remarks being quite novel.
In short, Zhang Kun's quarterly report this season is not to be missed.
The pace of medium-term economic growth will not be low
After the market’s recovery, institutional views have warmed up noticeably since early 2016, and this is also what Zhang Kun has consistently adhered to, believed in, and reiterated over the past few quarters.
But he looks even further. In this quarterly report, Zhang Kun laid out his "major trend forecast" for China's future growth rate and growth space.
He said that according to the country's "15th Five-Year Plan," our target is to reach the per capita GDP of a moderately developed country by 2035. Even if we use Latvia—the developed country with the lowest per capita GDP recognized by the IMF in 2024, at $23,400—as a benchmark, and ignore the possible raising of the developed country threshold driven by economic growth, in 2024, our per capita GDP will be $13,300. To reach this goal, the compound annual growth rate of per capita GDP must reach 5.27%, which is clearly higher than the overall global GDP growth rate in the coming years.
Moreover, Zhang Kun believes that even after our economy reaches (the moderately developed country) target, it may only be one milestone in development. After all, in East Asia, countries and regions with similar diligence and intelligence to mainland China—Japan, South Korea, and Taiwan—will all have per capita GDP above $30,000 in 2024.
In other words, he thinks that from an incremental perspective, the economic growth rate over the next few years will not be low, and the factors such as domestic demand and consumption driven by this deserve a more positive outlook than the market consensus.
The price decline of real estate in major cities may be ending
From the perspective of stock variables, Zhang Kun also believes that some economic factors may be underestimated.
He mentions that in recent years, based on indicators such as retail, consumer confidence index, and CPI, domestic consumption has consistently been rather weak. Among listed companies, those mainly focused on exports (i.e., overseas consumption or investment) have generally faced less operating pressure than those dependent on domestic demand. But he firmly believes that this is not the normal state of our economy.
He thinks that the significant decline in real estate prices over the past five years has affected residents’ wealth and balance sheets, while precautionary savings and early repayments have also impacted domestic demand. However, he believes that considering the low risk-free interest rates, potential policy support, and declines in new housing starts, the price downturn in major city real estate is likely entering its end phase.
Thus, the situation in which the incremental wealth created by ordinary people over the last several years is offset by declines in stock wealth, lowering the willingness to consume, is expected to change in the future.
People’s livelihood and social security will further improve
Based on the above factors in both incremental and stock aspects, Zhang Kun believes that in the next decade, both the actual living standards of ordinary people and the level of social security will see significant improvements, and the gap with living standards in developed countries will noticeably narrow.
Moreover, he firmly believes that the central government will continue to strongly boost consumption in 2026, improve investment efficiency, comprehensively expand domestic demand, launch dedicated actions for consumption stimulation, intensify the implementation of the "Two New" policies, and provide even greater support for the "Two Heavy" projects. Stimulating consumption will be given a prominent place in policy-making.
He also quoted Keynes from "The General Theory of Employment, Interest, and Money": Consumption is the sole objective of all economic activity. Zhang Kun believes that the ultimate purpose of economic activity should be to enable ordinary people to live better lives, and higher quality consumption is one of the main forms it takes.
China’s AI has opportunities
Zhang Kun also rarely shared his views on the AI industry.
He believes that in this AI wave, having a strong domestic demand market is also a vital driver for technological innovation; robust demand and profitability can siphon global resources, talent, and capital to serve innovation.
Using top overseas models like GPT and Gemini as examples—these have become must-have research tools for many investors, and their $200/year consumer subscriptions are a major current source of income for these companies.
He confidently discusses the "AI bubble theory," and in the current controversy around it, asserts that these tangible subscription incomes play an important role in boosting the confidence of model companies to fundraise and keep investing.
In comparison, a domestic company in his portfolio also has leading foundational model capabilities. With a stronger consumer environment, subscription revenues and model investment can interact more effectively, helping narrow the gap to globally leading model levels in the future.
“With a moat, the city remains”
In the quarterly report, Zhang Kun once again reaffirmed his confidence in the business models, competitive moats, and cash flow generation abilities of companies in his portfolio.
He mentions that more and more investors are now worrying about whether “the moat remains, but is the city still there” regarding the stocks they've bought. He believes that (his main holdings’) “city” is still very much there.
Zhang Kun also said that, given China’s conditions, reaching developed country status is not unexpected; difficulties are only temporary, and more and more ordinary people will enjoy good lives. The prices offered by the market now make some high-quality companies very attractive even for privatization, which is a good opportunity for long-term investors.
Increasing allocation to liquor stocks, favoring high-quality tech stocks
Perhaps due to his confidence in major holdings, Zhang Kun maintained the “super stable state” of his portfolio and top holdings throughout Q4 last year.
Both E Fund Blue Chip and E Fund Quality Life 3-Year Fund, which he manages and invest purely in domestic stocks, rarely saw “no change” in their heavy stock positions.
Specifically, (taking E Fund Blue Chip as an example), this quarter he increased allocations to Tencent, Moutai, Wuliangye, Fenjiu, Yum China, and CNOOC, and decreased allocations to Alibaba, Laojiao, JD Health, and Focus Media (see the chart below).
In his QDII fund, the increase in liquor stocks and persistence in domestic AI stocks were all clearly shown this quarter.
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