Credit Suisse says regulatory risks are unlikely to stop China's tech companies from growing in 2021

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Credit Suisse predicted China will record 2.2% growth for 2020, followed by a sharp jump to 7.1% in 2021.

One of the main growth areas in China's markets is the technology sector, according to Ray Farris, chief investment officer for South Asia at Credit Suisse. China is "one of the few economies that has a credible and rapidly growing tech sector," Farris said on CNBC's "The technology landscape in China is fiercely competitive, where established tech giants regularly fend off new rivals trying to take away chunks of their market share.

"Unlike in the United States, where tech has recently been seen as something of an alternative to value trades, if we look at the performance of China tech on announcements of positive news on vaccines, China tech's actually benefiting because in China, tech is very much a growth play," he added. If I look at the recent regulatory actions, they appear to be somewhat sensible. And they don't appear to be anything that really is going to change this secular trend in the large tech companies in China, growing by gaining market share from offline.refers to a strategy of picking stocks that appear to be trading for less than their book value — essentially, they are said to be stocks that the market is underestimating.

Chinese tech companies are "stealing market share" from offline players in retail, health care, education and the like and that trend will continue, Farris explained. "So, stronger growth in China will just simply produce stronger growth in China's tech sector."

 

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