HONG KONG—Investors should tread carefully as they navigate a frothy internet sector in China, said Fan Bao, founder and chief executive of boutique investment bank China Renaissance, at the Converge technology conference hosted by The Wall Street Journal and f.ounders on Friday.

“It’s even more important in this market to focus on stock-picking,” he said. “You can’t really invest on a sector basis. Given the oversupply of capital, the casualty rate is going to be very high.”

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