Chinese tech investors are hearing warning bells after volatility in US tech stocks forced a fast-rising Wall Street hedge fund to clear its stock portfolio at a steep discount within a few days.“Don’t use leverage! Don’t use leverage! Don’t use leverage!” Shanghai-based public-markets analyst Harry Shen repeated to the South China Morning Post in an interview on Friday.Another warning came from Shanghai-based mainland Chinese stock market veteran Michael Zhang: “Don’t trade with borrowed money. Don’t blindly chase hot topics – because by the time you get in, it might be exactly when others are heading for the exit.”They were both reacting to the collapse of Situational Awareness, a fund founded in 2024 that bet big on AI. It offloaded billions of dollars’ worth of technology shares – funded with bank loans – to Citadel on Thursday, suffering heavy losses after it was unable to meet the collateral demanded by the lenders.In July alone, Situational Awareness, which bet heavily on the AI supply chain including memory-chip makers SK Hynix and SanDisk, and AI cloud-computing provider Nebius Group, saw its portfolio value plummet 67 per cent, The Wall Street Journal reported on Friday, citing a letter from the firm to investors.Situational Awareness founder Leopold Aschenbrenner was a former OpenAI researcher. Photo: X.com/leopoldaschAll those stocks experienced sharp swings in recent days. Shares of SK Hynix, which listed on Nasdaq on July 10, have fallen more than 10 per cent, while SanDisk and Nebius have slumped more than 30 per cent over the past month.