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Posted March 18, 2026 at 9:43 am
China’s economy is pivoting toward automation and AI as policymakers push for greater innovation and self-reliance. Brendan Ahern of KraneShares joins IBKR’s Elizaveta Gridneva to discuss the rise of humanoid robotics and why embodied AI could become the country’s next major growth engine.
The following is a summary of a live audio recording and may contain errors in spelling or grammar. Although IBKR has edited for clarity no material changes have been made.
Welcome to our latest podcast. My name is Elizaveta Gridneva, and today I have my guest, Brendan Ahern, who is the CIO of KraneShares. Hi, Brendan.
Hello, Elizaveta. Thank you for the opportunity to connect.
Thank you for joining us. I know that you have been studying China on a daily basis for the last decade, if not more. And I also heard that you have that blog called chinalastnight.com. Can you tell us more about it?
At KraneShares, the roots of the firm are really focused on investing in the growth segments of China’s economy and capital market. And that’s evolved into seeing trends in China as well as Asia and packaging that as exchange traded funds. But our flagship ETF is the largest China ETF in the United States, and to some degree that’s really what we’re known for.
But I think the most important thing we do is provide a balanced, data-driven perspective on what’s happening in China. I think sometimes the media can be overtly negative, that it’s either China is about to collapse or it’s about to take over the world. And so as professional investors, we want to look at China through a balanced, data-driven lens, and we deliver that on a daily basis. We’re trying to highlight, if you’re an investor in the space, what’s really the most important thing that you should know about that maybe is not covered in traditional media just because it’s not apocalyptic or it’s not one of the two extremes. So it’s become quite popular, and I think it’s really driven by the trust we try to build with investors on helping them navigate what’s taking place in China’s economy, capital markets, and the geopolitical situation.
Sounds great, and I will take the chance of having you today and let’s dive right into it and discuss a little bit about China. So I think the first question is that we see that Chinese equities have rebounded since January 2024. However, in quarter four of 2025 we already see it’s faded. So why do you think that’s happening?
Yeah. I mean, just to your point, the Chinese market really bottomed in January of 2024, where we had this three-year bear market. And we saw that basically derivative-induced meltdown as the real bottom take place. And since then, the market has kind of grinded higher. It’s been volatile. It’s kind of two steps forward, one step back.
And what we’ve seen that’s kind of interesting is that you have the market really fade after the third quarter of last year. And I think some of that is driven by the fact that a lot of the investors coming back to China were very invested in growth stocks. At the same time, some of the economic data in China slowed a little bit. Some of the fundamentals, some of the quarterly results from the companies slowed a little bit. And at the same time, as you saw this pickup in AI and semiconductors, investor preference shifted to the proverbial picks and shovels of the AI trade. So companies like Samsung, SK Hynix in South Korea, and TSMC in Taiwan—those three stocks really drove this incredible outperformance. Since the end of September 2025, the KOSPI is up almost 64%, the Taiwan stock market is up 30%, and yet these growth stocks for China are down almost 20%. So one, I would just say you had a little bit of a rotation. And why we think there can be a little bit of a rotation back is very simply that I don’t think investors are giving a lot of these Chinese companies—like the Alibabas and Tencents—the credit they deserve. These companies have done a lot in AI with large language models and cloud computing. And I think we’ll see that very shortly, as these companies are going to be providing their Q4 financial results.
So I think that’s one factor. The other factor is a little more nuanced, which is one’s definition of China. It’s important to recognize that there’s really two distinct opportunity sets. You have the Shanghai and Shenzhen stock markets, which are predominantly owned by investors in China. And then you have the Hong Kong market and U.S. ADRs that are predominantly owned by investors outside of China and by professional investors. If I’m benchmarked to MSCI China, I basically only care about offshore China. About 86% of MSCI China is Hong Kong and U.S. ADRs, and I’m really not that focused on the Shanghai and Shenzhen markets, which again are mainly owned by investors in China.
So you have these two Chinas. Because their investor bases are so different, they move differently. So even if we look at year-to-date performance, the Hang Seng is basically down a little bit. I mentioned these growth stocks in Hong Kong and the U.S. ADRs are down quite a bit more. But then if we look at Shanghai and Shenzhen, they’re actually up year to date.
So I think it’s just important for investors to recognize that these two distinct China opportunity sets move differently because the investor bases are so different. And really this offshore China is the definition of China for professional investors, which is why I think you saw this migration take place. China came back with these growth stocks, and then that money came out and funded these proverbial AI picks and shovels—TSMC, SK Hynix, and Samsung. And now we think there’s a little bit of a shift coming back.
That’s great to know. Thank you for this information. I think it’s really useful for our listeners to know about the two Chinas and to follow them separately if they can. And another issue—sorry, yes—you would like to add something?
No, thank you. Yeah, I mean, this is such a big part of what we try to do at KraneShares, this education. Because people will say, like, “Oh, China’s doing great,” or “China’s doing poorly.” But it really depends on what your definition of China is, because they are so different. They act so differently from one another.
Understood. That’s quite an insight. Thank you for that. If we talk about housing in China, it looks like it still remains an issue. We’ve seen a lot of news on that—a lot of sensational news, like you mentioned in the beginning. So what is happening now?
Yeah, we’re seeing a significant correction in housing prices in China. Some of that was driven by the government’s concern about overleveraged property developers, and that’s not turned into a financial crisis. At the same time, the fall in real estate prices has really weighed on households because historically two-thirds of urban household wealth is invested in housing. You’ve had this incredible urbanization take place in China over the last, call it, 40-plus years. And so investing in real estate was a one-way trade. That really stopped several years ago, driven by a number of government policies. The government needs technology more than they need more apartment buildings.
So the government arguably created a little bit of this downdraft, but it’s had an effect on consumer confidence. It’s had an effect on domestic consumption. And so I think as much as China’s economy—remember, the GDP is at an all-time high. The size of China’s economy has never been larger. But it’s been in tepid growth. It’s been slow growth, healthier growth arguably. And I think government policies are looking to stabilize these prices. Certainly we’re finishing the big government policy meetings in China, the dual sessions. And I think again you’re seeing more emphasis on really trying to raise the expertise of China’s economy in terms of high-end manufacturing and technology like artificial intelligence and semiconductors. That’s really where there’s a lot more emphasis going forward rather than infrastructure like we’ve seen historically. So as investors, knowing we’ve got this new 15th five-year plan, we want to focus where the government’s focused. And that’s clearly on technology, self-reliance, and looking to raise domestic consumption. So we think these are two very positive opportunities for investors in the coming year of the horse.
That’s great, yeah. And if you would say, what potential catalysts do you see for the China market on its horizon? As you mentioned, technology and robotics, right? China is leading that sector. So all the automation technology, those are on the menu, right?
Yeah, 100%. I think we see the implementation of the 15th five-year plan now that the dual sessions have finished. It’s now up to these government agencies to implement that plan. And so just to your point, it’s about technology self-reliance, so that’s semiconductors. A lot of those companies are listed on the STAR Board part of the Shanghai Stock Exchange, companies like Moore’s Thread and Canon. So one, for us, we are investors in the STAR Board. At the same time, the rise in domestic consumption as well as AI, we really think benefits the big technology players like Alibaba, Tencent, Baidu, and JD.
I think it benefits new players like Kuaishou and Bilibili. Certainly domestic consumption will benefit domestic tourism like Trip.com. So really, as investors, we’re quite constructive on the opportunity. I think we see positives. But I think the biggest thing investors should really be focused on is U.S.-China geopolitical relations. We know that the U.S. and China are having significant trade talks, and we have President Trump visiting China at the end of March. Then we know for President Trump and President Xi to meet, they’re going to want to announce a lot of big deals. So I think what we see is improving U.S.-China relations under President Trump with President Xi. There’s clearly a friendship, mutual respect, and then we think a potential trade truce could evolve into a bigger trade deal.
Thank you, Brendan. That’s great. And what other opportunities do you think investors should be on the lookout for in China today?
Well, I think one of the really big opportunities is we know China is very good at high-end manufacturing. You see that with electric vehicles like BYD, battery companies like CATL. But certainly we think humanoid robotics is going to be a very big trend in the years to come. And we think this is part of an AI trade, that humanoid robots are basically like remote control cars. They’re like a toy, but when you embody them with artificial intelligence, this is where it becomes a very viable economic tool.
And we think China, many Chinese companies, are really at scale. Companies like UBTech are already publicly traded, but really one of the key players, Unitree, is expected to go public this year. And I really think that like Alibaba really put China Internet on the map, I really think investors globally are going to be shocked that this isn’t something where Tesla might be talking about humanoid robotics. Unitree is producing 300 humanoid robots on a daily basis. And again, I think the real key here is the artificial intelligence. And we’re seeing other players in the space, Omi. There’s a whole host of companies that we envision as potential beneficiaries. This will be a global trade, which for us as investors means we’re focused on the global humanoid embodied intelligence opportunity. And we really think this is a very exciting extension, the proverbial tip of the spear of AI, this embodiment of physical AI. And Huawei thinks that by 2035, 90% of Chinese households could own a humanoid robot. So this is something that’s coming very quickly.
That’s so exciting and interesting. Thank you for this insight. Thank you for joining us today, and subscribe everyone to our IBKR Podcast. Thank you.
The analysis in this material is provided for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IBKR to buy, sell or hold such investments. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Interactive Brokers, its affiliates, or its employees.
Content on China Last Night is for informational purposes only and should not be construed as investment advice. This material represents an assessment of the market environment at a specific time and is not intended to be a forecast of future events or a guarantee of future results; material is as of the dates noted and is subject to change without notice. This information should not be relied upon by the reader as research or investment advice regarding the funds or any security in particular.
This material may not be suitable for all investors and is not intended to be an offer, or the solicitation of any offer, to buy or sell any securities. Investing involves risk, including possible loss of principal.
This material contains general information only and does not take into account an individual’s financial circumstances. This information should not be relied upon as a primary basis for an investment decision. Rather, an assessment should be made as to whether the information is appropriate in individual circumstances and consideration should be given to talking to a financial advisor before making an investment decision.
Forward-looking statements (including Krane’s opinions, expectations, beliefs, plans, objectives, assumptions, or projections regarding future events or future results) contained in this presentation are based on a variety of estimates and assumptions by Krane. These statements generally are identified by words such as “believes,” “expects,” “predicts,” “intends,” “projects,” “plans,” “estimates,” “aims,” “foresees,” “anticipates,” “targets,” “should,” “likely,” and similar expressions. These also include statements about the future, including what “will” happen, which reflect Krane’s current beliefs. These estimates and assumptions are inherently uncertain and are subject to numerous business, industry, market, regulatory, geo-political, competitive, and financial risks that are outside of Krane’s control. The inclusion of forward-looking statements herein should not be regarded as an indication that Krane considers forward-looking statements to be a reliable prediction of future events and forward-looking statements should not be relied upon as such. Neither Krane nor any of its representatives has made or makes any representation to any person regarding forward-looking statements and neither of them intends to update or otherwise revise such forward-looking statements to reflect circumstances existing after the date when made or to reflect the occurrence of future events, even in the event that any or all of the assumptions underlying such forward-looking statements are later shown to be in error. Any investment strategies discussed herein are as of the date of the writing of this presentation and may be changed, modified, or exited at any time without notice.
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