UBS Upbeat on China's Clean Energy Sector, Sees it Leading Overseas Expansion

(CNA, Shanghai, May 20, by reporter Liao Wen-chi) Looking ahead at China's economic prospects, UBS stated today that the expansion of Chinese enterprises into overseas markets will be a significant investment theme over the next 5 to 10 years. Particularly against the backdrop of a global energy crisis triggered by geopolitics, the clean energy industry chain is expected to become a representative sector for Chinese companies 'going global' in the future. The 29th UBS Asian Investment Conference (AIC) will be held in Hong Kong starting on the 25th. UBS held an online media briefing today to discuss China's macroeconomic outlook. Xu Bin, Head of Research at UBS Securities, said that China's macroeconomic performance in the first quarter was 'outstanding,' and the recent 'Trump-Xi meeting' has brought new positive expectations to the market. This is especially true as both sides expressed intentions to build a 'constructive and strategically stable relationship between China and the US,' and trade negotiations have achieved overall balanced and positive results, making future developments worth looking forward to. Regarding the stock market, he pointed out that China's A-shares have shown resilience amid the evolving risks in the Middle East since March and experienced a rally driven by the AI wave in April. Trading volume has been on an upward trend, market sentiment is optimistic, and major indices have hit 10-year highs. In light of this, the UBS strategy team has raised its profit forecast for A-shares this year from 8% to 11%. Xu Bin stated that UBS is optimistic about three major directions in the Chinese market: first, innovation and high-tech industries, especially artificial intelligence; second, structural opportunities amid the 'anti-involution' trend; and third, the globalization of Chinese companies. Xu Bin said that Chinese companies 'going global' is a particularly important investment theme for the next 5 to 10 years. They predict that by 2030, the contribution of overseas revenue from non-financial A-share companies could reach 25%. Furthermore, Xu Bin pointed out that the contribution of overseas business to gross profit continues to increase. For example, the gross margin for pharmaceutical products is set to rise from 45% in 2024 to 51% in 2025. Compared to domestic business in China, industries such as pharmaceuticals, machinery, electrical equipment, tech, hardware, and automobiles will have significantly higher overseas gross margins in 2025. Xu Bin also looked ahead to the representative industries for Chinese companies 'going global,' naming companies related to the energy and automotive industry chains as 'more aggressive in going overseas.' He also projected that industries including wind power equipment, energy storage equipment, new materials, solar power, and two-wheelers will achieve a compound annual growth rate of 20 to 30% in overseas revenue over the next 5 years. He noted that by 2030, the industries with the highest proportion of overseas revenue will include energy storage, construction machinery, and commercial vehicles, which are expected to reach 80% and 60% respectively.