Alibaba’s Tree and China’s Tech Forest

• Alexis Bienvenu
  Fund Manager
  La Financière de l’Échiquier (LFDE)

The MSCI China index has thus recorded one of the worst performances globally over the last six months: down 15 per cent in dollar terms, whilst the MSCI World index has risen by 10 per cent.

But this picture is misleading. Domestic Chinese shares listed in Shanghai and Shenzhen (‘A’ shares) have risen by around 12% over the period, a far cry from the underperformance of shares listed in Hong Kong. And, crucially, part of the Chinese market has been on a winning streak: the index of technology shares listed in Shanghai has gained nearly 70 per cent in US dollars over the p-half!

China’s stock market underperformance is in fact less a reflection of the Chinese economy than of a small group of internet platforms concentrated on the Hong Kong-listed segment, such as Tencent (-27%) and Alibaba (-34%). These pioneers of the consumer digital economy are no longer the main driver of investor interest, which is now focused on AI and industrial technologies. Yet in the AI-related industrial sector, and more broadly in innovative technologies linked to electrification, China has numerous companies that could prove to be serious competitors to Western leaders.

In the semiconductor sector, SMIC (Semiconductor Manufacturing International Corporation), whose share price has risen by around 33 per cent in dollar terms over the half-year, has become a symbol of China’s technological resilience. Although still lagging behind TSMC and Samsung, the company has managed to produce advanced chips (known as ‘7-nanometre’ class) despite US restrictions on cutting-edge equipment.

Further up the value chain, Cambricon Technologies, whose share price has risen by nearly 80 per cent over the same period, aims to become for China what Nvidia is today for the United States. The company develops processors for data centres, industrial applications and embedded systems. Whilst the technological gap with Nvidia remains significant, Cambricon benefits from a vast and largely protected domestic market, as well as Beijing’s determination to replace US technologies and Washington’s efforts to restrict Chinese access to Nvidia’s most advanced chips.

Furthermore, the stock market does not fully reflect China’s technological progress, as several cutting-edge companies are not listed: DeepSeek in artificial intelligence, DJI in drones, and Unitree Robotics in humanoid robots. But this could change, as several of them are among the potential candidates for Chinese IPOs in the coming years, which promises some very lively periods on the stock market.

China’s technological momentum thus continues to produce, quietly but steadily, remarkable results. According to the ‘Hamilton Index’ – an indicator developed by the Hamilton Centre on Industrial Strategy that measures global industrial dominance across ten advanced sectors – China now accounts for nearly 25 per cent of global output in advanced industries, up from 19 per cent in 2012. According to the same index, China has already overtaken the United States in seven of the ten advanced sectors studied¹.

Far removed from the spectacle surrounding US IPOs and the consumer internet stocks that have been sidelined on the Hong Kong stock exchange, China is therefore continuing, undeterred, to make headway in cutting-edge industries. The stock market boom could be spectacular when the day comes that the Alibaba tree no longer obscures the forest of companies that have become leaders in today’s most strategic technologies.

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Disclaimers
This information and these opinions are provided for information purposes only and, as such, do not constitute an offer to buy or sell any security, nor do they constitute investment advice or financial analysis. The opinions are those of the author; LFDE shall not be held liable for them under any circumstances. Past performance is not indicative of future results.

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¹The Hamilton Index, 2026: China’s Dominance in Advanced Industries Is Growing – Hamilton Centre on Industrial Strategy, ITIF – 6 May 2026