(Bloomberg) — China’s vaguely-worded plan to foster new growth engines is spawning a guessing game among investors over which stocks to bet on.
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The so-called new productive forces are meant to offer high technology, efficiency and quality. With industries from electric vehicles to hydrogen power, space flight to quantum technology mentioned this week, investors are speculating that Beijing will focus on artificial intelligence, chipmakers and automation.
“My guess would be artificial intelligence, digital economy, electric vehicle, semiconductor and other innovation industries,” said Kerry Goh, chief investment officer at Kamet Capital Partners Pte.
Stock traders have been left searching for bright spots from a largely disappointing annual gathering of the National People’s Congress, with little specifics offered by Beijing on how the nation will achieve an around 5% annual growth target. Chinese benchmark gauges have staged a tentative recovery in the past month, aided by state-fund purchases, and investors are looking for drivers to sustain future gains.
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Electric vehicle producers have been a favorite, but companies including BYD Co. are mired in a price war, intensifying the need for investors to find new bellwethers for a Chinese portfolio.
Beneficiaries may include chip industry leaders such as Semiconductor Manufacturing International Corp. and Hua Hong Semiconductor Ltd. The former has jumped almost 17% in Hong Kong since February, outpacing the 11% gain in the city’s tech index.
Other potential gainers include companies developing humanoid robots, according to Abrdn Asia Ltd.
“Raising productivity and moving up value chains means increasing use of automation,” said Xin-Yao Ng, an investment director at abrdn. “A big investment opportunity might be humanoid robotics, though I wouldn’t say it’s very new. Perhaps that’ll gain traction.”
Robotics companies rallied following the release of the government work report on Tuesday. Miracle Automation Engineering Co. jumped by the daily limit of 10% in the following two trading sessions, while UBTech Robotics Corp Ltd. more than doubled. President Xi Jinping was seen observing a walking robot at an exhibition during his Shanghai visit in November.
Still, some investors want to see Beijing come up with a detailed plan on promoting its new growth engines.
The plan is “short of specifics and actions,” Goh said, adding that he’s expecting to see more details on the amount of money Beijing is willing to put into those industries.
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