The Morgan Stanley Capital International (MSCI) China Index has just breached a near two-year high on the back of gains in Chinese technology stocks.
The MSCI China Index has reached its highest levels since July 2015, with state media hailing the news as presaging the strong confidence of capital markets in new growth drivers for the Chinese economy.
“Gains in science and technology stocks are the main reason for the rise in the MSCI China index, and their outstanding performance compared to traditional economy stocks will continue,” said Su Peifeng, a Hong Kong-based investment strategist with CMB International said to the State Council’s official news site.
According to official data the “new economic drivers” hailed by Li Keqiang in this year’s “Government Work Report” continue to significantly outperform the overall Chinese economy.
In Q1 2017 Chinese strategic emerging industries posted growth of 10% while hi-tech industries grew by 9.2%.
The volume of domestic patent authorisations for inventions surged by 55.3%, while the volume of clean energy vehicles leaped by over 80%.
Tech-related investment is also abetting the growth of traditional props of the economy, with investment in technological improvements rising by 7.9% in the first four months of the year, accounting for 44.2% of all manufacturing investment as well as outpacing its growth by 3 percentage points.
The MSCI China index is a broad measure of share performance that covers 85% of the Chinese equity sphere.
The index is comprised of 150 constituents, covering large and mid cap companies across China H shares, B shares, Red Chips, P chips as well as foreign listings.
Information technology stocks are heavily represented on the MSCI China Index, with a share of 35%.