Investors Shift to Selective China Tech Bets as Property Fades as Growth Engine

The Quick Take

• DBS Bank (HK) says the 'one big bet on China' mindset is giving way to selective sector allocation focused on technology
• Technology is displacing property as China's primary growth driver according to the DBS Bank head of research
• Institutional investors are picking individual tech winners rather than broad China exposure

DBS Bank's Dennis Lam, head of research in Hong Kong, has articulated what institutional investors are increasingly treating as the new China investment thesis: the era of buying China as a monolithic macro bet is over, replaced by selective sector allocation that specifically favours technology companies as property loses its decade-long role as the country's dominant growth engine. The structural shift reflects the government's explicit policy pivot toward advanced manufacturing, AI, electric vehicles and semiconductor self-sufficiency as the new drivers of Chinese economic expansion, backed by subsidies, preferential financing and regulatory support for designated champion companies.

The investment implication of this tech-over-property pivot is significant for portfolio allocation in Asia. China technology giants—Alibaba, Tencent, Huawei's ecosystem, Xiaomi and BYD in the tech-adjacent EV space—are being re-evaluated by international institutional managers who had previously stayed away due to regulatory crackdown risk following the 2021 tech sector sweep. The property sector's fading growth contribution removes a significant source of systemic financial risk that had weighed on China's credit rating outlook, but also eliminates the residential mortgage business that had been a key earnings driver for Chinese banks and a wealth creation mechanism for Chinese households.

The key watchpoint is the pace of China's fiscal stimulus toward technology sectors in Q4 2026, particularly any announcements of new semiconductor foundry subsidies or expanded Made in China 2025 budget allocations. PBOC credit data will signal whether the property sector's credit contraction is being matched by proportional expansion in technology and manufacturing lending. The macro variable is the US-China technology decoupling trajectory—as long as Washington maintains and expands export controls on advanced chips and semiconductor equipment, Chinese technology companies face a structural innovation cost that caps the upside case for technology-focused investors seeking exposure to China's next growth cycle.

Synthesized from 1 source.