If Hong Kong offered a reminder of overlooked income opportunities, Shenzhen – widely regarded as China’s “Silicon Valley” and a global hub for electronics manufacturing and innovation – provided a sharp contrast, placing us firmly back in the world of high-growth technology.
During the visit, we met leading companies across electric vehicles, robotics and artificial intelligence (AI), including BYD – one of the world’s largest electric vehicle manufacturers, known for its battery technology and rapid growth in electric cars – and a range of robotics firms.
Progress is clear, but still evolving
There is no doubt that innovation is happening at pace. The level of investment, ambition and government support remains significant.
However, seeing the technology first-hand offered a useful reality check. Demonstrations of humanoid robots, for example, were still relatively early stage. While progress is rapid and commitment to improvement is clear, the technology is not yet as advanced as some of the market excitement might suggest.
This does not diminish the long-term opportunity, but it does highlight that timelines for commercialisation may be longer than expected.
Clearer conviction in the supply chain
Where the investment case felt more immediate was in electric vehicles and battery technology.
The visit to BYD reinforced a strong outlook for batteries, supported by sustained demand and ongoing technological improvement. This aligns with our positive positioning in battery producers, where earnings visibility and structural growth appear more tangible.
Innovation is accelerating productivity
One interesting takeaway was the increasing use of AI within companies themselves. In areas such as product design, timelines are shortening significantly, allowing businesses to bring ideas to market more quickly.
While still at an early stage, this could become an important driver of efficiency and profitability over time.
What does this mean for investors?
Shenzhen highlights both the excitement and the complexity of investing in technology.
There are undoubtedly significant long-term opportunities, but expectations can sometimes run ahead of reality.
For investors, this reinforces the importance of selectivity:
- Focusing on areas with clearer earnings visibility (such as batteries)
- Being cautious around more speculative themes
- Balancing growth exposure with typically more stable income streams elsewhere
Technology is likely to remain as a key driver of future returns, but not all parts of the story will progress at the same pace.
AI
Artificial intelligence.
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