HONG KONG, Dec 18 Reuters Some Asian hedge funds are betting on leading Chinese tech companies such as Xiaomi and Baidu, buoyed by their artificial intelligence innovations, despite the threat of further U.S. curbs that could take effect next year.

A U.S. ban imposed on advanced chip exports to China has kept many global investors on the sidelines. But those scouring China for potential winners said firms there are developing AI products for a massive home market as their selfdeveloped large language models catch up, and valuations are lower than their U.S. peers.

Fund managers say they are particularly upbeat about growing AI adoption in the lives of China39;s 1.4 billion people, from mobile phones and smart wearables to social apps and games.

Chinese innovations are reaching endusers rapidly, said Nilesh Jasani, founder of GenInnov Funds and former vice chairman for Asia at Jefferies.

We have been extremely excited by China39;s ascendancy in mobility and mobiles, benefiting names like Xiaomi and Baidu, he said, noting his fund has been raising exposure to China.

China39;s leading search engine company Baidu recently launched a texttoimage generation tool for its ad clients. It also plans to release AI glasses early next year and debut its robotaxi service outside mainland China.

Hong Kong hedge fund Monolith Management, which manages assets worth 300 million, has set its sights on smartphone maker Xiaomi and its suppliers.

Xiaomi offers compelling edge AI user…