bat stocks.jpg

China pushing to be the world leader in AI

While the media is caught up in crpytocurrency mania, the true game changing technology that investors should be focused on is artificial intelligence. From self-driving cars to Dr. Robot, AI is going to change our lives in profound ways in the near future. Russian President Vladimir Putin says, “Artificial intelligence is the future, not only for Russian, but for all of humankind. It comes with colossal opportunities, but also threats that are difficult to predict. Whoever becomes the leader in this sphere will become the ruler of the world.” Many people worry about the risks like robots deciding to destroy humans like in the Terminator or the potential for huge job losses. But I love this quote from futurist Ray Kurzweil:

We have already eliminated all jobs several times in human history. How many jobs circa1900 exist today? If I were a prescient futurist in 1900, I would say, “Okay, 38% of you work on farms; 25% of you work in factories. That’s two-thirds of the population. I predict that by the year 2015, that will be 2% on farms and 9% in factories.” And everybody would go, “Oh, my God, we’re going to be out of work.” I would say, “Well, don’t worry, for every job we eliminate, we’re going to create more jobs at the top of the skill ladder.” And people would say, “What new jobs?” And I’d say, “Well, I don’t know. We haven’t invented them yet.”

China's size advantage

Those of us in America trust that the Silicon Valley will innovate and become the AI winners; but it would be foolish to count out the China who have a huge structural advantage over the US. At 730 million, China's online population alone is almost twice the size of America's and more tech-savvy. Not only that, China still has room to grow as its internet penetration is still below 55%. "Mobile use in China is light years ahead of anywhere else," says one tech player. "So you have a huge experimental lab for exciting AI applications. In China we see different consumer behaviours every day, in the US it's a lot slower."

Furthermore, there is a huge supply of data which is the lifeblood of AI and big data. Because privacy laws are more lax, China begins collecting information from the moment they are born while tech giants Baidu, Alibaba and Tencent are watching what they buy, where they travel and who they chat to.

China building $2.1 billion AI research park

Finally, it is important to remember that China is a communist capitalist society. The government is firmly behind its tech sector and can invest billions of dollars to push innovation even faster. Last year, China laid out plans to become a world leader in AI by 2030. Yesterday, China announced plans to build a $2.1 billion technology park dedicated to developing AI which will be constructed within five years. It will cover over 135 acres of land. The park will be home to around 400 businesses and is expected to create an annual output value of about 50 billion yuan ($7.7 billion). High-speed big data, cloud computing, biometrics and deep learning will be the focus of the new park.

Investment ideas

For those investors looking for exposure to China's AI development, we recommend first looking at the BAT (Baidu, Alibaba, Tencent) stocks which are China's version of the FANG stocks (Facebook, Amazon, Netflix, Google). The BAT stocks are the Chinese technology giants that are investing billions into AI. If you want broader exposure, then you can consider Kraneshares China Internet ETF (ticker KWEB) which is up over 60% over the last year. Roughly 25% of the ETF is invested in the BAT stocks. For those that want even broader China exposure, there is the iShares MSCI China ETF (ticker MCHI) which is up over 30% in the last year. Over 35% of the MCHI is invested in BAT stocks.

blog-subscriber-china-bonus

Share This Story, Choose Your Platform!

About the Author: Chris Wang

Chris Wang

IMPORTANT DISCLOSURE INFORMATION 

Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Runnymede Capital Management, Inc.-"Runnymede"), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Runnymede.  Please remember that if you are a Runnymede client, it remains your responsibility to advise Runnymede, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Runnymede is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Runnymede's current written disclosure Brochure discussing our advisory services and fees is available for review upon request. Please Note: Runnymede does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Runnymede's web site or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.

Search Website

Annuity Review Database

Recent Posts

About our Podcast