(Bloomberg) — China’s vaguely expressed plans to foster new growth engines are creating a guessing game among investors over which stocks to bet on.
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The so-called new production forces aim to provide advanced technology, efficiency and quality. Industries from electric vehicles to hydrogen power, spaceflight to quantum technology were mentioned this week, with investors speculating that the Chinese government will focus on artificial intelligence, chipmakers and automation.
“My guess would be artificial intelligence, the digital economy, electric vehicles, semiconductors and other innovation industries,” said Kelly Go, chief investment officer at Kamet Capital Partners.
Stock traders look for bright spots from the largely disappointing annual meeting of the National People's Congress, with few details from Beijing on how China will meet its annual growth target of about 5%. There is. China's benchmark index has tentatively recovered over the past month, supported by state capital purchases, and investors are looking for drivers to sustain future gains.
Read more: Decoding the buzzwords from China's key political meetings
Electric car makers are popular companies, but companies like BYD are locked in a price war, increasing the need for investors to find new leaders for their China portfolios.
Companies that could benefit include chip industry leaders such as Semiconductor Manufacturing International and Hua Hong Semiconductor. The former has risen nearly 17% in Hong Kong since February, outpacing the city's tech index's 11% rise.
Other companies that could benefit include those developing humanoid robots, Abdon Asia said.
“Increasing productivity and moving the value chain forward means increasing the use of automation,” said Xin Yao Ng, investment director at abrdn. “The big investment opportunity could be humanoid robots, but I wouldn't say it's very new. Maybe it will gain traction.”
Robotics companies rallied after Tuesday's release of the government activity report. Miracle Automation Engineering Inc. rose a maximum of 10% for the day over the next two trading sessions, while Ubitech Robotics Inc. more than doubled. When President Xi Jinping visited Shanghai in November, he was seen observing walking robots at an exhibition.
Still, some investors want the Chinese government to come up with a detailed plan to foster new growth engines.
Goh said the plan “lacks specificity and action,” adding that he hopes to see details of the funds the Chinese government intends to pump into these industries.
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