Their reasoning includes expectations that weakening the US megacaps will help bolster the relative attractiveness of Chinese technology companies, which are continuing to invest in areas of growth. Meantime, the growing uncertainty over prospects for the US sector could send buyers to their cheaper Chinese peers which are still being championed by the government in Beijing.
The MSCI China Information Technology Index has risen 45% this year, versus a 32% gain in the Nasdaq Composite. It trades on 27 times 12-month forward earnings, compared to 32 times for its US counterpart.The prospect of the Republicans losing the Senate in next month’s US election has focused attention on a report from the antitrust panel of the Democrat-controlled House Judiciary Committee last week, which recommended curbing the powers of US technology giants including Amazon.
The plenum is likely to focus on migrating demand from goods to services and emphasise self-sufficiency in imports including electronics, which should bolster the case for owning stocks in the technology sector, according to Tai Hui, chief market strategist for Asia-Pacific at JPMorgan Asset Management."That’s been a theme we’ve been advocating for some time and it would be nice for the 14th Five-Year Plan to reiterate,” he said.
And for McKinley’s Gillam, the success and continued investments of China’s tech stars makes it unlikely that Congress will seek to rein in America’s tech titans.