Highlights

• In 2020, mainland China, together with the Hong Kong stock exchange, is the second-largest capital market worldwide in both market capitalization and listing number. Chinese stocks have drawn great attention from global capital.
• Innovations are getting harder to unlock business values, as companies' returns on innovation declined by 55% compared to 5 years ago.
• The innovation input, which is primarily measured by the R&D expense to revenue ratio, was 3.53% in 2019, while top innovating Chinese public companies spent 13% of revenue on R&D-related projects on average.
• The average capital market valuation of this portfolio is 20 P/S ratio, which is lower than the overall 30 P/S of China's A-shares, indicating the portfolio covers the trendiest companies as well as the rising and underestimated companies.
• Both government policy and the market demand and supply triggered innovation. China's fourteenth FYP that emphasizes 'high-quality economy' and 'strategic resource concentration' will shape tomorrow's Chinese innovation outlook.