'Disappointing' share prices abound in China, but venture fund sees possible winners

  • Dipping share prices of companies like Chinese group-buying website Meituan-Dianping and Chinese ride-sharing giant DiDi contribute to dwindling investor sentiment, although certain industries still have room to grow, says Edith Yeung, head of 500 Startups' China unit.
  • Video live-streaming is one industry that could be on the rise, Yueng says.

Dipping share prices of companies like Chinese group-buying website Meituan-Dianping and Chinese ride-sharing giant DiDi have contributed to dwindling investor sentiment, although certain industries still have room to grow, according to an early-stage venture fund.

"Meituan, DiDi both had gone public in Hong Kong, but some of these numbers are certainly a little bit disappointing," Edith Yeung, head of venture capital fund 500 Startups' China unit, told CNBC on Monday, adding that it "for sure contributed to why [there was] a little bit of cooling down in terms of valuation," and to investors becoming more conservative.

One industry that Yueng said could be on the rise, however, is video live-streaming, specifically ByteDance — a Chinese internet company that she says uses artificial intelligence and machine learning technology. The company's Chinese-marketed app Douyin boasts 500 million monthly active users, according to Yeung. The company also has made inroads into the U.S. market with TikTok – a platform for short-form mobile videos, which adds another 500 million monthly active users, she said.

This is an area that even social media behemoth Facebook "didn't really get," Yeung said, explaining that video live-streaming is grabbing the attention of teenagers globally and as a result, "I'm very very bullish on live-streaming as a particular industry growing worldwide and particularly in China," Yeung said on "Squawk Box."

The ongoing trade tensions between the world's two largest economies also have seen a slowing down of investment flow between Washington and Beijing.

In terms of foreign investment flowing from China into the U.S., investment during former U.S. President Barack Obama's administration had an over 90 percent government approval rate, Yeung said. The current approval rate sits at little more than 60 percent under President Donald Trump's administration, she added.

"It's getting a lot tougher. Who knows which industry is more sensitive than others in terms of getting approval?" Yeung said.

On the other hand, the investments flowing from the U.S. into China depend on the sectors involved, Yeung said. "In the area of financial services, consumer brand e-commerce is certainly still very welcomed — but not so much with technology-related [industries]."

Disclosure: Edith Yeung and 500 Startups do not own shares in ByteDance