Please see the below article from EPIC Investment Partners detailing their thoughts on the technology sector in China. Received this morning 18/02/2025.
“This photo taken yesterday of Jack Ma shaking hands with Premier Xi Jinping is perhaps THE most important photo that I have seen in China in the last 5 years!!”
Jefferies’ Janet Harbison. She is not wrong.
Four years after launching a regulatory crackdown that plunged the technology sector into turmoil (and saw the Asia ex Japan region index fall over 40% from the February 2021 high to the October 2022 low), the Chinese leader sat down publicly on Monday with Alibaba co-founder Jack Ma.
Alibaba and subsidiary Ant Financial, whose IPO was cancelled in late 2021, bore the brunt of that campaign.
Xi delivered a speech after hosting Ma, Meituan’s Wang Xing and Xiaomi’s Lei Jun. Also present were Wang Xingxing (head of robotics startup Unitree), DeepSeek’s founder Liang Wenfeng and Huawei Technologies founder Ren Zhengfei among others. All key players in China’s technology sector.
The technology sector already accounts for some 15% of GDP and is likely to overtake the housing market within the next few years.
The focus was clearly intended to offer Government support and assistance for China’s rapidly developing technology sector but it has much broader and very positive ramifications for domestic consumption. The technology companies are, broadly speaking, domestically orientated and this is part of a bigger push to encourage households to consume.
Household savings are, as we have pointed out in previous notes, nothing short of MASSIVE. Unlocking this savings pool will see domestic consumption surge thus underpinning growth in the world largest economy (in purchasing power parity terms).
This is a game changer. Hold on to your hats.
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Alex Clare
18/02/2025