Investors are always chasing good growth stocks, and artificial intelligence (AI) shares are the new darlings. The government-owned Hong Kong Investment Corporation (HKIC) has joined the fray.
It has formed its first commercial partnership with home-grown unicorn SmartMore, an AI specialist that produces visual inspection machines for industrial production and assembly lines, which already has more than 300 clients around the world, including such household names as Apple, Tesla and BYD.
With HK$62 billion (US$7.9 billion) under management, the HKIC is the city’s closest thing to a sovereign wealth fund. As Financial Secretary Paul Chan Mo-po said in his budget, the fund will play a key role in promoting Hong Kong as an innovation and technology hub.
The HKIC has not disclosed how much it will invest in SmartMore. The tech firm has promised to list on the Hong Kong stock market. It will also set up an academy to train AI talent in the city and explore opportunities across the Greater Bay Area.
The news came as QuantumPharm, a pharmaceutical company using AI-powered research to make new drug discoveries, debuted in Hong Kong. The offer was oversubscribed 103 times. The price of shares rose 25 per cent, but is now closer to the IPO price of HK$5.28.
Investor enthusiasm for a firm that has yet to make a profit – its listing being allowed under new stock market rules – may signal a nascent recovery of the IPO market. Confidence was probably boosted by Tencent, which owns 12.91 per cent of the shares. Other big shareholders include Google and SoftBank.
Hong Kong has long aspired to become a tech hub, with limited success. But with strengthened links to the Greater Bay Area and the Belt and Road Initiative, and the ever closer relationship between high-finance Hong Kong and hi-tech powerhouse Shenzhen, the city can take advantage of a new ecosystem of investors and cutting-edge researchers.
To follow up on its first partnership with SmartMore, the HKIC is expected to step up such investments with more promising local unicorns in the coming year.
That will hopefully inject new energy and new growth potential into not only the local stock market but also the economy, especially for the employment of hi-tech talent.
Where the authorities used to take a “market-enabling” philosophy to promote tech and economic development, the SmartMore partnership signals a more proactive role for the government aiming to promote innovation and a competitive start-up culture.
This is going in the right direction. Hong Kong must ride the wave of tech-driven growth that Beijing has prioritised for the national economy. The city may yet see its dream of being an innovation hub fulfilled at long last.
