“There are six major disruptive technology trends and China, with its huge population and digitally savvy consumers, is leading the world in innovation and embracing change,” Amy Lo, co-head of wealth management Asia Pacific, told a media briefing at the bank’s fifth annual “Disruptive Technology CEO Summit” in Hong Kong on Tuesday.
“Not only will these developments affect the way people will live over the next decade, but they offer tremendous investment opportunities,” she said.
UBS segments the technologies into six categories: 5G, smart cities, fintech, healthtech, agritech and artificial intelligence.
China is in the forefront of 5G development, with Beijing intending to roll out the fifth generation of cellular network technology across selected cities within the next few months.
“Asia’s share of global 5G smartphone shipments will exceed 75% in 2020 and its share of global 5G capex spending will be at least 50%,” estimated Sundeep Gantori, an executive director at UBS’s global wealth management chief investment office, who also spoke at the briefing.
“China will drive that growth and will solidify world leadership in 5G technology,” he said.
Gantori argued that China is also ahead with its construction of so-called smart cities, which incorporate information and communication technologies and automation into their infrastructure, creating strong demand for robotics, artificial intelligence and cybersecurity products and services.
By 2017 there were “500 smart cities at various stages of development with an estimated market size of RMB 650bn ($92bn)”, and according to third party forecasts, “the addressable market for China’s smart city projects should reach $320bn by 2025,” he said.
Meanwhile, Hong Kong is well-positioned to benefit from the Greater Bay Area initiative through co-developing cross-border connectivity in areas such as payments, immigration, telecommunications and data transfer, he added.
Fintech is the third segment dominated by China, which is the global leader in payments, online lending and other functions, according to Gantori.
Healthtec “is the next big thing”, and “agritech “is the final digital frontier”, he said.
The sixth segment, artificial technology (AI), “is the key enabling technology set to transform many businesses,” and UBS expects AI in Asia to create annual economic value of between $1.8trn and $3trn by 2030.
Investor access
The best ways for individual investors to gain exposure to these segments is through “platform companies”, such as the well-known large China businesses that give consumers online access to goods and services, or through “enabling technology” companies, such as the manufacturers of advanced semiconductors, according to Gantori.
In fact, there are also several mutual funds that have adopted “disruptive technologies” as their theme.
Pictet Asset Management has recently been promoting three, well-established, multi-billion dollar security, digital and robotic funds to investors in Asia.
There have also been several fund launches this year with technology or innovation themes targeted at investors in the region.
These include Value Partners’ Asian Innovation Opportunities Fund, UOB Asset Management’s United Global Innovation Fund, and Nikko Asset Management’s Ark Disruptive Innovation Fund.
Other fund managers with a wider investment mandate, such as Raymond Ma, who manages the Fidelity Consumer Fund, also sees opportunities in China “new economy” companies, including robotics, automative technologies and semiconductors.
