China’s ‘Smart Economy’ Push Spurs Hunt for New Stock Winners
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Investors are growing more upbeat about China’s push to build a “smart economy,” with AI, semiconductors and a range of frontier technology sectors emerging as beneficiaries of the policy drive.Author of the article:You can save this article by registering for free here. Or sign-in if you have an account.(Bloomberg) — Investors are growing more upbeat about China’s push to build a “smart economy,” with AI, semiconductors and a range of frontier technology sectors emerging as beneficiaries of the policy drive.Subscribe now to read the latest news in your city and across Canada.Subscribe now to read the latest news in your city and across Canada.Create an account or sign in to continue with your reading experience.Create an account or sign in to continue with your reading experience.The latest signals from Beijing’s political gathering have reinforced the view that tech self-reliance and industrial upgrading will anchor economic growth in the years to come. Analysts at Citigroup Inc. and Morgan Stanley say they’re favoring tech and innovation sectors, expecting further policy support to follow.China’s new economic blueprint signals a shift in AI strategy from a phase centered on technological breakthroughs toward commercialization. For equity investors, that would widen the pool of beneficiaries beyond the earlier favorites such as chipmakers to sectors including humanoid robots, brain-computer interfaces, biomanufacturing and future energy.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.Policymakers’ “focus on hard core tech and innovation stands out,” Morgan Stanley strategists including Laura Wang wrote in a note. “Upcoming future industries are also clearly laid out for growth and development transition” they said, citing a focus on quantum tech, embodied intelligence, brain-machine interface and 6G. Shares of AI chipmakers, as well as quantum computing and brain computer-related stocks, jumped after the government report’s release. A gauge of humanoid robot stocks rose 1.4% on Thursday, snapping an eight-day losing streak, and extended gains on Friday. More broadly, Chinese markets have held up better than their Asian peers amid the global selloff caused by the war in Iran.Smart Economy In a sign of the tech sector’s rising importance to the economy, “artificial intelligence” was mentioned seven times in Premier Li Qiang’s report to the National People’s Congress, up from three a year earlier. Beijing also set a target of increasing the value added of core digital economy industries to 12.5% of gross domestic product by 2030, from 10.5% last year.“We will create new forms of smart economy,” Li said on Thursday. That phrase, along with references to “satellite Internet,” “future energy” and “new types of energy storage” has sent investors on a hunt for fresh stock winners.To some onshore market watchers, the first-time inclusion of “smart economy” in the work report signals more than a short-term boost for related stocks. AI is likely to move into a broader commercial rollout, creating opportunities in infrastructure such as chips, computing power and cloud services, as well as in applications like robotics and intelligent driving, China International Capital Corp. analysts including Li Qiusuo wrote in a note. Beyond the well-known technology winners, analysts at China Galaxy Securities Co. and GF Securities Co. see fresh opportunities emerging in energy, after Beijing elevated “future energy” to the top of its emerging‑industry agenda. That shift “underscores the strategic importance of energy technologies in the new round of industrial competition,” analysts including Zhang Jun at China Galaxy wrote. Priority areas include hydrogen, advanced energy storage and controllable nuclear fusion, they added.Stocks related to wind, nuclear and pumped hydro power climbed after the government unveiled a plan to expand capacity in those sectors by 2030.Concrete MeasuresSome investors remain cautious, viewing the latest policy plan as largely repackaging themes promoted in recent years and saying they want to see a more detailed roadmap.“The continued focus on tech and innovation is in line with market expectations and while staying the course is commendable, nothing new in terms of direction or specific support was announced,” said Vey-Sern Ling, managing director at Union Bancaire Privee. Still, renewed pursuit for beneficiaries may inject fresh energy to Chinese stocks, which have lost momentum since February. The tech-focused Star 50 Index is down 9.1% since a January high, while the onshore benchmark CSI 300 has been rangebound. Citigroup expects more concrete measures to support new growth drivers could emerge in 2026. Beyond sectors such as aerospace, biomedicine, and quantum technology, the bank is also positive about healthcare.“Technology and healthcare feature within key work tasks, placed as high priorities that we think will get policy support in 2026,” analysts including Pierre Lau said, describing the government’s agenda as “more than old wine in a new bottle.”Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information.