MSCI has launched two China technology indices to meet the needs of international and domestic investors looking to invest in companies at the forefront of the country’s technology and innovation-led economy.

With a methodology combining 27 technology sub-themes, the MSCI China Tech 100 Index and MSCI China A Onshore Tech 100 Index are constructed with an understanding that companies in the technology value chain may be found not just in information technology but across many traditional industries. As such, inclusion in the indices is independent of a company’s industry or sector classification. This allows broader representation across multiple industries and sectors.

The indices aim to represent the performance of growth-orientated, disruptive companies that are, through technology, transforming business models and how businesses interact with society. They are designed to include stocks from the consumer, communication services, healthcare and information technology sectors, which may see a rise in the number of companies as the smart economy grows. The target business activities or sub-themes can be expanded to reflect the development of technology innovation over time.

Jack Lin, head of MSCI’s Asia-Pacific client coverage, comments: “For the past five years, China has been transitioning from an ‘old economy’ focused on manufacturing to a ‘smart economy’ driven by consumption and services, with Chinese companies increasingly taking leading positions globally in terms of innovation and R&D expenditure.”

“The industrial innovation and growth of a technology-based digital ecosystem is transforming traditional sectors and creating new sectors. This has placed limitations on the traditional single-sector-based approach in terms of measuring the performance of technologies that are transforming activities as diverse as consumption, mobility, automation and healthcare services. Investors have expressed demand for innovative solutions that are unconstrained by traditional industry classifications and that is what these new broad-based indexes are designed to deliver,” he adds.