1、5 February 2025Chinas,not AIs,Sputnik momentWe think 2025 is the year the investing world realizes China is outcompeting the rest of the world.Its becoming impossible to not acknowledge that its corporates are delivering superior value for money,and often superior quality,across multiple spheres of

2、manufacturing and increasingly services too.Investors pay for dominance,and we expect the China discount to disappear.Furthermore,we believe profitability can surprise to the upside through the cycle,due to policy swings to favour consumption over production,and potentially from financial liberaliza

3、tion.We believe the bull market for HK/CH equities began in 2024,and will exceed prior highs in the medium term.China first rose to global corporate dominance in clothing,textiles,and toys.It then dominated in basic electronics,steel,shipbuilding,and more recently,white goods,solar,and other less gl

4、amorous areas.And it came out of nowhere to dominate industries as complex as telecom equipment,nuclear power,defense,and high-speed rail.Its technological achievements have been discounted by investors.But by late 2024 China received attention for its rapid ascension to lead the world in auto expor

5、ts,with it flooding the world with high functioning,attractive EVs at prices far below equivalent existing models.This gained the worlds attention.And in 2025,China in one week launched the worlds first sixth generation fighter plane and its low-cost AI system,DeepSeek.Marc Andreessen referred to De

6、epSeeks launch as AIs Sputnik moment,but it is more Chinas Sputnik moment,where China IP gets recognised.The list of high value-add areas China excels in,and dominates the supply chain in,is expanding at a pace without precedence.We consider global investors tend to be heavily underweight China,just