A new study has found that the stocks that have seen the biggest increase in value since 2011 have all been technology stocks.
The study by asset management firm Credit Suisse, which is published in the International Journal of Asset Management, analysed more than 500 companies that are based in China and are valued at more than $10bn.
Its authors said that while most of the companies have seen strong performance, some are still struggling to recover from a weak environment.
“Technology stocks have enjoyed a particularly strong rebound from a global recession and are on a path to becoming the best-performing stocks in China,” said senior economist Michael Snaith.
“But the long game is not yet clear.”
The study found that tech stocks in particular have seen a rise in value as investors have become more confident in their ability to recover in the wake of the global economic downturn.
“Many technology stocks are expected to return to profitability after a prolonged period of weakness and as the Chinese government continues to pursue policies that are aimed at fostering growth and investment in the Chinese economy,” the report said.
“This suggests that the long run is likely to be positive for technology stocks.”
However, there are also some big issues with the analysis.
“Some of the tech stocks are currently trading at an average price that is significantly below that of their peers in the technology industry,” it added.
“These companies are also subject to significant regulatory uncertainty, including from regulators and regulators around the world.”
However, it is also important to note that while these companies are facing tough financial and operational conditions, they still have a long way to go to overcome these challenges.
“The growth of these stocks has been so strong that the potential for further gains from further strong growth has yet to be realised.”
Mr Snaeth said there are two ways that investors could invest in these companies, one being by investing in cash and the other by investing more in technology.
“While it is a valid option for some investors to put more cash into technology stocks, it does not offer the same potential for returns as investing in technology stocks in the short-term,” he said.
The report concluded that the technology stocks that are being valued at the highest prices are those that have benefited from a strong China, which has boosted the country’s tech sector, as well as its exports and the export of its products.
“In terms of technology growth, China is a key player in the global technology economy,” Mr Snaes said.
“The China-led growth of the Chinese tech sector and its continued economic growth have enabled China to create an impressive new set of global markets.”
Chinese technology companies have a clear competitive advantage and will continue to dominate the global economy for the foreseeable future.
“China’s economy has benefited from the impact of its technology sector, particularly its technology exports, as the country has become a global technology hub.”
A positive outlook for China’s economy in the future will have an impact on the broader global economy.
“MrSnaeth added that the future of China’s technology sector is “particularly important” for investors.”
At the moment, China’s growth and innovation appear to be a positive trend, and it appears that this trend will continue in the medium and long-run,” he concluded.