At the 2018 China Equity Investment Summit Forum & the Second Golden Bull Award for Equity Investment in China’s Ceremony held on November 17th, CoStone Capital Zhang Wei delivered a keynote speech titled The Spring of Institutional Investors Is Here. In his speech, he said 5% listed companies have met the criteria of value investment for which he came up with 7 measurements.
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“These measures will effectively bring us more vigorous SMEs and tech companies. All bets are off.” said Zhang Wei.
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A few days ago, the China Securities Regulatory Commission (CSRC) encouraged private equity funds to buy shares of listed companies and get involved in their M&As by participating in non-public offerings, transfer agreements, and block trades. CoStone Capital says some companies on the secondary market already have good investment value, and it on the lookout for the opportunities of their mergers and acquisitions.
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“What’s new about the new economy? First, chronologically, the industries which emerged and boomed in the last five to ten years, like NEVs, semiconductors and 5G, belong to the new economy. Second, in terms of problem solving, new models and new business forms like mobile payment, are characterized as the new economy industries.
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Zhang Wei emphasized: when we invest in a company, what we invest in is its entrepreneurs.
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When you truly understand a company，you should go straight to make an overweight investment in it.
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Reasons behind the rapid growth of unicorns are huge, real demand, a moat around them and advantages of technology and product. But eventually, they have to compete for market share with their management. Unicorns that take the lead in business model are even more unreliable than those that pull ahead in technology because business model is easier to replicate due to the ways they share. Reasonable valuation should also be taken into consideration in an investment. As primary-market investors, we have to evaluate the company’s profitability and potential for growth. If it is overpriced, it’s just a bubble.
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Tao Tao was invited to the 5th China Culture and Finance Innovation Summit held by the Beijing Cultural and Creative Industry Promotion Center on October 26, 2016, and delivered a keynote speech on Bolster the Cultural and Creative Industry with Capital.
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In fact, CoStone is one of the first PEs to keep a watchful eye on the M&E investment, ever since the newspapers in 2005. CoStone has been paying great attention to the changes in this realm every single day for decades. From newspapers and broadcasting to the Internet and MICT (Mobile Information Connectivity Technology), CoStone lived the influence of these changes.
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On April 14th, Zhang Wei delivered a keynote speech titled "Avoiding Mediocrity" at the CoStone Capital 2018 Annual LP Conference. By reviewing the history of CoStone Capital, he explained how to avoid mediocrity as a company as well as an investment firm.
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China has surely entered a post-industrialized society with an increase in the middle class. Under such social background, how should investment firms seize the opportunities? Which areas are really worth paying attention to? What is the method of investment? At today’s 2018 CoStone Capital Investor Annual Conference, Chairman Zhang Wei had given CoStone’s answers to these questions.
Over the past year, the bull market returned, with technology leading the way.
As I said back in October 2024, the rally that began on September 24 was not merely a rebound, but a reversal. Since then, China's capital markets have undergone a broad revaluation, moving from undervaluation toward fair value.
The Shanghai Composite Index reached its highest level in a decade. The "Yi-Zhong-Tian" trio—Eoptolink, Zhongji Innolight and TFC Communication, three prominent Chinese optical communications stocks—saw their share prices multiply severalfold in a single year. Cambricon's market capitalization briefly exceeded RMB 600 billion. Elsewhere in the technology sector, triple-digit price-to-earnings ratios and valuations exceeding RMB 10 billion became commonplace.
Some investors were greedy; others, fearful. Still others asked me: Are technology stocks in a valuation bubble?
My answer is that what we are witnessing is the hunger and anxiety of an era, reflected in the capital markets. Once you understand this, the current fervor for technology investing is no longer difficult to explain.
Investment has nothing to do with macroeconomics, but everything to do with geopolitics.
China-US relations will shape the investment landscape for decades to come. Geopolitics has played a major role in shaping the hunger and anxiety of our times, fundamentally reshaping the way we invest.
What, then, lies at the heart of China's hunger and anxiety?
The Fourth Industrial Revolution is already underway, yet China has not fully overcome the technological shortcomings left by the Third. There is no time to lose.
This is why some people wonder: Why do Chinese computing chip companies command such high valuations when their technologies still lag so far behind NVIDIA's? Why does NVIDIA trade at just 50 times earnings, while a company hailed as "China's answer to NVIDIA" commands a multiple of 300?
To me, this gets the logic exactly backward.
It is precisely because these companies cannot catch up with NVIDIA in the near term that they command a higher strategic premium. The wider the technological gap, the greater the strategic value.
The further something lies beyond our reach, the stronger our hunger. The harder it is to catch up, the deeper our anxiety. If China were to achieve a complete breakthrough in computing chips one day, valuations might actually come down.
Where can one find China's most spectacular natural landscapes?
Much of the answer, I believe, lies in and around the Hengduan Mountains: the Meili Snow Mountains, Jade Dragon Snow Mountain, Mount Gongga, Mount Siguniang, Jiuzhaigou, and many others. Vast differences in elevation and deep fault lines have given rise to landscapes of extraordinary grandeur.
Hard-tech investing follows a similar logic.
Technological gaps, discontinuities in capabilities, and missing links in industrial systems: a leap in difficulty brings a leap in valuation, and a successful breakthrough can, in turn, bring a leap in returns.
This logic extends well beyond computing chips. It is equally evident in memory semiconductors, commercial spaceflight, and other sectors where China still faces substantial technological gaps with other countries.
It was precisely this conviction that led CoStone Capital, starting in 2016, to decisively focus its investments on three areas: hard tech, emerging industries, and life sciences and healthcare. In this context, "hard tech" refers specifically to important industries in which China faces a technological gap with the United States.
Thanks to this forward-looking strategy, CoStone Capital established an early presence across the full value chains of key sectors, including semiconductors, artificial intelligence, and robotics.
Looking ahead, the frontiers of technological progress and industrial upgrading are boundless. Nor can the gaps in hard technology be closed overnight. The twin windows of opportunity presented by technological innovation and the development of homegrown alternatives to foreign technologies have only just begun to open.
The road ahead is long, but the future holds immense promise.
As an investment firm, CoStone Capital will continue to invest where the hunger and anxiety of each era run deepest, move forward with the tensions that shape our times, and extend our reach toward the most challenging—and most important—frontiers.
Spring 2026
