If You Want to Invest in the 'China M7'... PLUS China AI Tech TOP10 Newly Listed

Hanwha Asset Management announced on May 13 that it will list the 'PLUS China AI Tech TOP10' Exchange-Traded Fund (ETF), which invests in 10 leading artificial intelligence (AI) big tech companies in China.

The PLUS China AI Tech TOP10 is a product that focuses its investments on the top 10 tech companies leading China's advanced industries. It includes BYD, the world's top electric vehicle seller; Xiaomi, known as the 'Apple+Tesla of China'; Alibaba, the largest digital platform in China and often called the 'Amazon of China'; SMIC, the world's third-largest semiconductor foundry; and Tencent, a global leader in the gaming market and a core company in China's digital ecosystem.

The ETF will also include NetEase, a digital entertainment company growing around games and content; Baidu, a pioneer in Chinese technology focusing on autonomous driving and AI based on its search engine; Meituan, a super-app company operating lifestyle services centered on food delivery and local services; Lenovo, a leading Chinese IT hardware company in the global PC market; and JD.com, a B2C-focused e-commerce platform with strong logistics capabilities.

With the emergence of DeepSeek, a generative AI known for 'high efficiency and low cost,' China is undergoing a re-evaluation phase, shifting its national growth engine from real estate to advanced industries. To foster advanced industries, the Chinese government has announced various policies such as 'Made in China 2025' and the 'Next Generation AI Development Plan.' Over the past decade, the government has provided strong policy support, including $912 billion (1,368 trillion KRW) in AI industry investments through policy funds. Companies in related sectors are expected to benefit from these initiatives.

The PLUS China AI Tech TOP10 includes 9 out of the 10 so-called T10 companies, which represent China's leading tech firms. These companies are based in mainland China and are expanding their businesses mainly in Europe, the Middle East, Africa, and Asia rather than in the Americas, so the impact of U.S. President Donald Trump's tariff policies is expected to be limited.

It is also notable that the valuation attractiveness of these companies has increased due to the aftermath of the U.S.-China 'trade war.' The forward 12-month price-to-earnings ratio (PER) of the Hang Seng Tech Index, a key Chinese tech index, is at 17.5 times, which is undervalued compared to major tech indices in other countries such as the Nasdaq in the U.S. (25 times) and India (24 times).

Choi Youngjin, Head of Marketing at Hanwha Asset Management, explained, "The Chinese government is fostering next-generation technology sectors, including AI, as core national strategic industries. At the same time, private companies have been building independent ecosystems in areas such as autonomous driving, robotics, semiconductors, and cloud computing. The domestic market, with a population of approximately 1.4 billion, and the ability to leverage vast amounts of data, provide China with a competitive edge that sets it apart from any other country globally."