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2017.12.22
Professor Xu Xiaonian is an old friend of CoStone. He delivered an outstanding speech on how to overcome middle income trap at our annual meeting. He said in the speech that economic downturn would bring enormous wealth, which is what we are experiencing. China: Market Economy or Planned Economy is another classic of markets he publishes as a supporter of market economy. Professor Xu Xiaonian prefers liberalism. He worships markets, property rights and entrepreneurship in keeping with Adam Smith and Haye, and is always cautious about Keynesian economics and big government.
Professor Chi Pang-yuan is a highly respected scholar, educator, writer, and translator in Taiwan. Her memoir, The Great Flowing River, is a best-seller that won critical acclaim both on mainland China and among overseas Chinese communities. Her story reflects the regrettable reality of our nation and ethnic groups. It is a story that can breathe because of the homesickness of drifting people and the vicissitude of a nation in it.
The Story of Art is one of the most famous and popular books on art, written by E.H. Combrich, the tutor of most historians on modern art. It tells the life stories of various artists. Quoted from Gombrich, “There really is no such a thing as Art. There are only artists.” Gombrich’s venerable work has inhabited a unique niche, having been created specifically for newcomers to art. One should not spend all his or her time on making money. If possible, one needs to listen to a wonderful song, read a beautiful poem and enjoy a delicate painting.
Liushen Leilei believes that he is a rebellious person who will “scale the walls of Tang poems and bring back the fresh blossoms”. With passion and compassion, he spares no effort to dispel the myths surround us and take readers back to the times when the poems were flourishing. The spirits of ancient poets shine through this book and enlighten readers.
Misbehaving is Thaler’s arresting, frequently hilarious account of the struggle to bring an academic discipline back down to earth and change the way we think about economics, ourselves, and our world. He reveals how behavioral economic analysis opens up new ways to look at everything and enlightens listeners about how to make smarter decisions. Misbehaving also presents the living application of behavioral economics in life.
“Eating watermelons” which means sipping tea in English, has been an Internet buzzword. Written in humorous and ridiculous words, you can tell that it is a typical literary work of Liu Qingyun. The Era of Watermelon Eaters tells a story of four strangers who happen to be the game changers. With clarity and simplicity, this book is suitable for readers at all ages. It offers a profound understanding on the reality we are facing.
Rewritten by: Luo Xinying, Edited by: Du Zhixin, Wei Yiyi
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