Executive Summary
Chinese artificial intelligence model developer Zhipu is planning a second listing in Shanghai following its recent $558 million initial public offering in Hong Kong, with its stock extending gains since its January 8 debut to approximately 320%. This ambitious dual-listing strategy represents far more than a corporate financing decision—it signals Singapore’s increasingly complex position as both beneficiary and potential casualty of the intensifying US-China AI competition.
For Singapore, Zhipu’s trajectory illuminates three critical dynamics: the city-state’s emergence as an essential gateway for Chinese AI capital, the mounting geopolitical risks threatening this intermediary role, and the substantial investment opportunities arising from China’s AI ecosystem—opportunities that Singaporean investors and policymakers must navigate with unprecedented sophistication.
The Valuation Arbitrage: Understanding Zhipu’s Strategic Calculus
Zhipu’s decision to pursue a second listing in Shanghai rather than remaining exclusively in Hong Kong reflects a calculated response to significant market inefficiencies between Chinese and Hong Kong capital markets.
Shanghai’s chip-heavy Star 50 Index is up more than 9% this year, compared with an almost 3% decline in the Hang Seng Technology Index. This performance divergence, however, tells only part of the story. The more fundamental driver is the persistent valuation premium that mainland A-shares command over Hong Kong H-shares—a structural arbitrage that Chinese technology companies are increasingly exploiting.
Chelsey Tam, a senior equity analyst at Morningstar, noted that listing on the mainland allows companies to broaden their investor base and improve access to domestic capital. For Zhipu, this translates into concrete financial advantages: access to mainland retail investors who have demonstrated insatiable appetite for AI-related stocks, and the ability to tap into state-backed investment funds that prioritize technology self-sufficiency.
The valuation gap between Chinese AI companies and their American counterparts remains stark. Zhipu and MiniMax, two of China’s six “AI tigers,” recently floated on the Hong Kong Stock Exchange at valuations below $7 billion each, compared to OpenAI at $500 billion and Anthropic at $183 billion. This 70-fold valuation disparity creates both opportunities and pressures for Chinese AI firms seeking to compete globally while constrained by limited access to Western capital markets.
Singapore’s Strategic Position: The Indispensable Gateway Under Threat
Singapore has systematically positioned itself as the critical intermediary between Chinese AI innovation and Western capital—a role that generates substantial economic benefits but carries escalating geopolitical risks.
The “Singapore-Washing” Phenomenon
Singapore has become the perfect conduit for Chinese companies, offering a 17% corporate tax rate, robust funding ecosystem, and white-glove government services, combined with a Chinese-majority population where Mandarin is widely spoken alongside English. These attributes have made Singapore the preferred jurisdiction for Chinese AI companies seeking to attract Western investment while maintaining operational proximity to Chinese markets.
The phenomenon has become so pronounced that observers coined the term “Singapore-washing” to describe the strategy. Chinese companies relocate from China to Singapore to secure foreign investment and commercial contracts, with the Manus AI case serving as a prominent example.
However, Beijing launched a regulatory investigation into Meta’s acquisition of Manus to assess compliance with export controls and technology transfer policies, raising questions about whether relocating to Singapore still protects Chinese tech firms. This scrutiny signals that China’s tolerance for capital flight through Singapore may be narrowing, potentially threatening the viability of this intermediary model.
The Geopolitical Tightrope
Singapore is betting that neither superpower can afford to let money remain on the table, but this strategy carries inherent risk: pragmatism works only as long as both sides value Singapore’s services more than they resent its refusal to pick a team.
For Singaporean policymakers, the Manus investigation represents a warning shot. China may crack down on “Singapore-washed” tech companies, with potential consequences including threats to revenue from Chinese advertisers and leverage over China-based family members of relocated employees.
Simultaneously, the United States has demonstrated willingness to scrutinize investments that could violate outbound investment restrictions. Benchmark’s $75 million investment in Manus sparked criticism from other US venture capitalists and a reported Treasury Department investigation.
Singapore finds itself navigating an increasingly narrow channel between two superpowers, each demanding greater alignment while Singapore attempts to preserve profitable neutrality.
Investment Implications for Singapore
Despite—or perhaps because of—these geopolitical complexities, Chinese AI stocks present compelling opportunities for Singaporean investors who can navigate the risks effectively.
The Rally’s Momentum
Hong Kong-listed Zhipu AI surged nearly 30% after releasing its GLM-5 model, while MiniMax saw shares jump 13.7% following its M2.5 launch, with Shanghai-listed UCloud Tech surging 20% to hit the daily limit. These dramatic moves reflect genuine technological progress combined with strong policy support from Beijing.
Premier Li Qiang called for “scaled and commercialized application of AI” across China’s economy, signaling strong government support for the sector. This top-level backing provides a policy floor under Chinese AI investments that American companies cannot match, given the more fragmented and uncertain regulatory environment in the United States.
Wall Street’s Validation
JPMorgan Chase recommended that investors buy stocks of AI developers MiniMax Group and Knowledge Atlas Technology (Zhipu), while Goldman Sachs rated chip designers Shanghai Biren Technology and MetaX Integrated Circuits as new buys based on the strong AI growth outlook. This endorsement from major investment banks provides validation for Singaporean institutional and retail investors considering exposure to Chinese AI stocks.
The investment thesis extends beyond pure-play AI companies. Chinese artificial intelligence-related stocks are expected to continue driving Hong Kong and mainland markets, with Julius Baer projecting Hong Kong’s Hang Seng Index to reach 29,500 by year-end, representing a 12.8% advance.
The Cost Advantage
Perhaps the most compelling aspect of the Chinese AI investment case is the dramatic cost efficiency that Chinese developers have achieved. Chinese AI firms operate at one-sixth to one-fourth the cost of American systems, threatening US dominance. This cost advantage stems from multiple factors: lower labor costs, government subsidies, willingness to use domestic chips despite performance limitations, and intense domestic competition driving efficiency improvements.
For investors, this cost structure creates two opportunities: first, Chinese AI companies can achieve profitability at much lower revenue levels than American competitors; second, they can offer services at price points that make AI adoption economically viable for emerging markets across Asia, Africa, and Latin America—markets largely ignored by American AI giants focused on premium Western customers.
Singapore’s National AI Strategy: Building Domestic Capabilities
Recognizing both the opportunities and vulnerabilities inherent in its position, Singapore has launched an ambitious program to develop indigenous AI capabilities while deepening its role as a regional AI hub.
Unprecedented Investment Commitment
Singapore will pour in more than S$1 billion ($786 million) to fund public artificial intelligence research over the next five years, with investment used to set up research centers, build AI capabilities, and develop the nation’s talent pipeline. This represents one of the most substantial per-capita AI investments by any nation globally.
Singapore launched a “Champions of AI” program to support firms wanting to use AI to transform their business, with support including enterprise transformation and workforce training, while expanding the Enterprise Innovation Scheme to provide businesses with a 400% tax deduction on AI expenditures capped at $39,654 per year for 2027 and 2028.
Infrastructure and Ecosystem Development
Micron Technology committed approximately $24 billion to expand its wafer manufacturing operations in Singapore, adding 700,000 square feet of cleanroom space at an existing NAND manufacturing complex. This massive investment in memory chip production—critical infrastructure for AI workloads—positions Singapore as an increasingly important node in the global AI supply chain.
Google announced expansion of its local R&D footprint by scaling specialized teams across software engineering, research science, and UX design, unveiling a Google Cloud Singapore Engineering Center to work directly with Singapore-based enterprises. These commitments from American technology giants provide counterbalance to Singapore’s growing ties with Chinese AI ecosystems.
The Dual Engagement Strategy
Singapore’s approach reflects sophisticated strategic thinking: simultaneously deepening engagement with both Chinese and American AI ecosystems while building domestic capabilities that reduce dependence on either superpower.
Budget 2026 announcements—including formation of a National AI Council, enhancements to the Productivity Solutions Grant, and the Champions of AI program—signal a deliberate shift towards building an intelligent, future-ready digital economy. Prime Minister Lawrence Wong will personally chair the National AI Council, underscoring the issue’s strategic importance.
This positioning allows Singapore to benefit from Chinese AI innovation and cost advantages while maintaining access to American technology and capital markets—but only if the city-state can continue walking the tightrope between increasingly hostile superpowers.
Zhipu’s Technological Capabilities: Understanding the Investment Target
For Singaporean investors evaluating exposure to Zhipu specifically, understanding the company’s technological position is essential.
Model Performance and Differentiation
Zhipu’s latest large-language model, GLM-5, surpassed a competitor from US-listed Moonshot AI to clinch the top place among open-source models on ranking site Artificial Analysis. This achievement demonstrates that Chinese AI developers are rapidly closing—and in some dimensions, eliminating—the technological gap with American competitors.
Zhipu AI, with $1.4 billion in state-backed investments and offices across the Middle East, UK, Singapore, and Malaysia, represents the tip of China’s Digital Silk Road strategy. The company’s international expansion reflects both commercial ambition and strategic alignment with Chinese government priorities.
The Efficiency Thesis
DeepSeek’s claim of training a competitive model for just $6 million demonstrates efficiency over extravagance, ubiquity over superiority—while America restricts access to advanced chips and creates export controls, China develops systems that work with whatever hardware is available. This adaptability may prove decisive in the long run, as it enables rapid iteration and deployment without dependence on cutting-edge—and geopolitically sensitive—semiconductors.
US Restrictions and Their Paradoxical Impact
In January 2025, the United States Commerce Department blacklisted Zhipu in its Entity List due to national security concerns. Rather than crippling the company, this blacklisting may have accelerated its development of self-sufficient capabilities and strengthened its appeal to governments and enterprises seeking alternatives to American AI providers.
The blacklisting also reinforces the investment thesis that Chinese AI companies will increasingly dominate markets across the Global South, where American restrictions create opportunities for Chinese vendors unburdened by US export controls.
Risk Factors for Singaporean Investors
While the opportunities are substantial, Singaporean investors must carefully weigh several categories of risk:
Geopolitical Risk
The primary risk is that escalating US-China tensions could force Singapore to choose sides, eliminating the arbitrage opportunities that currently make Chinese AI investments attractive. The question isn’t whether Singapore can remain neutral but whether it can remain indispensable, with Beijing’s investigation of Manus suggesting tolerance may be wearing thin.
Regulatory Risk
Chinese AI companies operate in a heavily regulated environment where government priorities can shift rapidly. Companies that fall out of favor with regulators—or that become too successful in ways that threaten state interests—face existential risks that Western investors may underestimate.
Valuation Risk
Investor interest in the sector has been accompanied by an ongoing debate around the risk of an AI-related market bubble, according to Minyue Liu, an associate investment director at Fidelity International. The 320% surge in Zhipu’s stock price since its IPO may reflect genuine value creation, speculative excess, or—most likely—some combination of both.
Tai Hui, APAC chief market strategist at JP Morgan, considered the talk of AI bubble “a little premature” with plenty of quality names globally backed by solid fundamentals, noting that investors are making more discerning bets among major cloud and AI infrastructure providers whose spending is supported by underlying earnings rather than heavy borrowing.
Operational Risk
Beyond questions of whether LLM providers can broaden their user base enough to monetize effectively, they face significant operational hurdles including US export controls limiting access to advanced chips and operating with far less capital and computing power than Silicon Valley developers.
The hypercompetitive Chinese market also creates downward pressure on pricing. Zhipu co-founder and chairman noted that the Chinese market is hyper-competitive, which naturally drags prices down.
Strategic Recommendations for Singapore Stakeholders
For Policymakers
Singapore must accelerate development of indigenous AI capabilities to reduce strategic dependence on either superpower. The current investment trajectory is appropriate, but execution will be critical. Particular focus should be placed on:
- Talent development: Building world-class AI research capabilities that can attract top researchers regardless of nationality
- Regulatory framework: Developing AI governance models that can serve as neutral standards acceptable to both Chinese and American stakeholders
- Infrastructure investment: Ensuring Singapore possesses the computational and data infrastructure necessary for frontier AI research
The city-state should also prepare contingency plans for scenarios where maintaining neutrality becomes impossible, identifying which partnerships are essential and which can be sacrificed if forced to choose.
For Institutional Investors
Singaporean institutions should pursue measured exposure to Chinese AI stocks while implementing rigorous risk management:
- Diversification: Maintain exposure across both Chinese and American AI ecosystems rather than concentrating in either
- Due diligence: Invest in deep research capabilities to understand the technological differentiation and competitive positioning of Chinese AI companies
- Position sizing: Treat Chinese AI investments as higher-risk, higher-return components of portfolios rather than core holdings
- Geopolitical monitoring: Develop frameworks for rapidly adjusting exposure based on evolving US-China relations
For Retail Investors
Individual Singaporean investors should approach Chinese AI stocks with both enthusiasm and caution:
- Education: Invest time in understanding the technology and competitive dynamics before committing capital
- Volatility tolerance: Recognize that these stocks will experience dramatic swings based on both technological developments and geopolitical events
- Long-term perspective: Focus on companies building sustainable competitive advantages rather than chasing short-term momentum
- Risk management: Limit exposure to levels where even total loss would not impair financial security
Conclusion: Singapore’s Inflection Point
Zhipu’s dual listing strategy encapsulates the opportunities and challenges confronting Singapore at a critical inflection point in the global AI race. The city-state has successfully positioned itself as an indispensable intermediary between Chinese innovation and Western capital, generating substantial economic benefits while maintaining strategic flexibility.
However, this position is becoming increasingly precarious as US-China competition intensifies and both superpowers demand greater alignment from partners. The Manus investigation by Chinese authorities and growing scrutiny from American regulators suggest that the window for profitable neutrality may be closing.
For Singaporean investors, Chinese AI stocks—particularly Zhipu given its dual-listing strategy and technological capabilities—represent compelling opportunities if approached with appropriate sophistication. The combination of technological progress, cost advantages, government support, and valuation gaps creates a strong investment thesis.
Yet these opportunities come bundled with risks that demand careful management: geopolitical tensions that could suddenly eliminate arbitrage opportunities, regulatory unpredictability in Chinese markets, valuation concerns amid rapid price appreciation, and operational challenges facing companies trying to compete globally with limited resources.
The next 12-24 months will prove decisive. If Singapore can maintain its intermediary role while building indigenous capabilities, it will emerge as one of the world’s preeminent AI hubs—a Switzerland of the AI age. If forced to choose between superpowers, it will inevitably diminish as an independent technology power while becoming more tightly integrated into whichever sphere it selects.
For now, the opportunities outweigh the risks—but that calculation could change rapidly. Singaporean investors and policymakers must remain vigilant, adaptive, and prepared for scenarios ranging from continued prosperity to forced realignment. The AI race is accelerating, and Singapore’s position at its geographic and strategic center makes the city-state both indispensable and vulnerable in equal measure.
This analysis is based on publicly available information as of February 15, 2026. Investors should conduct their own due diligence and consult with financial advisors before making investment decisions. Geopolitical and market conditions can change rapidly, potentially altering the risk-reward profiles discussed herein.