Investors are constantly on the hunt for growth stocks, and artificial intelligence (AI) stocks are the new hottest thing — with government-owned Hong Kong Investment Corporation (HKIC) joining the fray.
The company has signed its first commercial partnership with SmartMore, a domestic unicorn company that specializes in AI and manufactures visual inspection equipment for industrial production and assembly lines, and already has more than 300 customers around the world, including well-known companies such as Apple, Tesla, and BYD.
With assets of HK$62 billion (US$7.9 billion), HKIC is the closest thing Hong Kong has to a sovereign wealth fund and, as Financial Secretary Chan Mo-po said in the budget, the fund will play a key role in promoting Hong Kong as an innovation and technology hub.
HKIC did not disclose the amount of its investment in Smartmore. The technology company has committed to listing on the Hong Kong stock market. It also plans to set up an academy to train AI talent in Hong Kong and explore business opportunities across the Guangdong-Hong Kong-Macao Greater Bay Area.
The news comes as QuantumPharm, a pharmaceutical company that aims to use AI-driven research to discover new medicines, listed in Hong Kong. The offering was 103 times oversubscribed, and its shares have risen 25% and are now nearing their IPO price of HK$5.28.
Investor enthusiasm for the company, which is not yet profitable (its listing is permitted under new stock market rules), could signal a recovery in the IPO market. The boost in confidence was likely driven by Tencent, which owns 12.91% of the shares. Other big shareholders include Google and SoftBank.
Hong Kong has long aspired to become a technology hub with limited success, but its strengthened ties with the Guangdong-Hong Kong-Macao Greater Bay Area and the Belt and Road Initiative, as well as closer ties between financial powerhouse Hong Kong and tech powerhouse Shenzhen, stand to benefit from a new ecosystem of investors and cutting-edge researchers.
Following its initial partnership with SmartMore, HKIC is expected to step up investments in more promising local unicorns in the coming year.
This is expected to bring new energy and new growth potential to the economy, not just to the local stock market, but especially in hiring high-tech talent.
While the government has so far adopted a “market enabling” philosophy to foster technological and economic development, the partnership with SmartMore signals a more proactive role for the government as it seeks to foster innovation and a competitive start-up culture.
This is a step in the right direction. Hong Kong should ride the wave of technology-driven growth that Beijing is prioritizing for the national economy. Hong Kong may finally realize its dream of becoming an innovation hub.
