Chinese Tech, the future of global technology
It is undeniable that technology is the most essential part of our life, starting from the second we wake up until going to bed. However, most of us might only be familiar with technology from the west.
In the present, China has been moving up the rank and transforming to be the world’s number one technology leader. According to Hang Seng Index Company, HKEX, Chinese tech companies’ market capitalization accounts for almost 33% of all the world’s tech companies. One of the key drivers that makes China the world’s technology leader is a cooperation between Chinese government and their private sectors which aims to be “modern’s economy” and targeting to be the global technology leader by 2035. China’s policies are supporting their technology competitiveness, restoring the economy of remote areas, supporting eco-friendly business, and driving towards a low-carbon economy to help achieve the 2030/2060 climate goals for sustainable growth.
China’s 14th Five-Year Plan (FYP) was approved to provide the country’s strategic blueprint for the future of the country. Major themes are prioritizing the development of technology and science by educating people and creating new innovations to meet the goal of becoming the world's number one in technology. With a population of over 1.4 billion people, China is well known for one of the most populous countries in the world. Considering a huge number of populations, creating technology only for Chinese users would reach a huge number of users. Facebook and YouTube have been famous social media platform for users around the world, but China has also developed platforms only for Chinese users e.g., Weibo, Youku, WeChat that has replaced those giant’s tech companies from the west.
Applications that we are familiar with, such as Shopee, Lazada, TikTok, or even the famous gaming company, Garena, which is a subsidiary of Tencent company. Tencent company provides online gaming e.g., FIFA Online 4, League of Legends, Blade & Soul or famous mobile games like ROV, they are all from China.
However, when it comes to Chinese tech companies that have shaken up the tech industry, Alibaba and Xiaomi are the answer. They have penetrated the daily lives of people around the world in short period of time. As we can see, Chinese e-commerce, social media platforms and other players in tech industry are greatly outperform and shows continued growth.
We can see the whole picture of Chinese tech industry by looking at Hang Seng TECH Index. The index that represents the 30 largest technology companies listed in Hong Kong that have high business exposure to technology themes and pass the index's screening criteria. The Hang Seng TECH Index market value is forecast to grow from $150 billion to $870 billion over the next five years. Technology companies that are in Hang Seng TECH Index such as Xiaomi, JD.com and Tencent (Source: Goldman Sachs Global Investment Research June 2020)
Additionally, if you are interested in start-up company with high growth potential, you can consider "SSE Star 50 Index”. The index represents 50 start-up securities with largest market capitalization and good liquidity listed on SSE Science and Technology Innovation Board. The SSE Star 50 Index market value is forecast to grow from $40 billion to $800 billion over the next five years, the growth is more than 20 times. (Source: Goldman Sachs Global Investment Research June 2020)
Learn more details at https://www.principal.th/en/principal/CHTECH-A
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For any investors who are interested in investing in China's technology with the highest growth potential and becoming to be the world’s number one, can invest through Principal China Technology Fund or PRINCIPAL CHTECH. The Fund is a feeder fund of the underlying funds which focus on investing through iShares Hang Seng Tech ETF and KraneShares SSE STAR Market 50 Index ETF. Both underlying funds have passive investment policy to invest in businesses and innovation which related to technology in China. The fund also focuses on investment in Soft Tech industry such as Cloud, Digital, E-Commerce, Fin-Tech, Internet, and Mobile as well as Hard Tech industry such as advanced technology equipment and new energy resources. Other CIS/ETFs which management company deems appropriate. These technologies are in line with national strategy, China’s 14th five-year plan that prioritizing the development of technology and science. The country’s long-term goals are strengthening Chinese economy and being the technology leader in the world by 2035.
For more information, please contact 02-686-9595
Disclaimer
- Investors should understand characteristic of mutual fund, return conditions and risk before investing.
- The fund and/or the master Fund may invest in derivatives for hedging purpose depends on Fund Manager decision, investors may receive gains or losses from the foreign exchange or may receive the money less than the initial investment.
- The fund has highly concentrated investment in China. Therefore, investors have to diversify for their portfolio.
- Investors should study the prospectus before investing.
- Past performance does not guarantee future results.
- The Management Company reserves the right to change the fund type in the future to Feeder Fund or Direct investment or return to a Fund of Funds without increasing the risk level of the investment, which is at the discretion of the fund manager that depend on the market situation and it must be the best benefit to unitholders. However, the management company will notify to the unitholders at least 30 days in advance by company’s website at www.principal.th or any other channel specified by the Management Company.
