Innovation in China
The mobile boom in China has driven innovation and today China possesses a host of new internet creations that lack U.S. equivalents. As a result, there may be a significant long-term opportunity in China.

Chart showing China's internet base nearly 3x that of the U.S. 

  • Smartphones have quadrupled the number of internet users in China during the last decade, helping Chinese companies to amass large revenue streams that support experimentation and ingenuity in the internet space. Government policies and the absence of offline infrastructure, such as retail stores and an established television advertising ecosystem, have also aided in China’s rapid internet development.

  • Once known for companies that initially imitated their U.S. internet counterparts, China is now a trailblazer in the internet space with many unique offerings.

  • One China-based company, Meituan, combines food ordering, reviews, travel and delivery into one popular “super app.” Evolutionary mobile payment platforms Alipay and WeChat Pay are each approaching one billion users, enabling trillions of U.S. dollars in payment volume. Alibaba has also developed smart supermarkets, blurring offline and online commerce unlike any American retailer.

  • Despite concerns about the Chinese economy and the trade war with the U.S., investors interested in innovative technology may find the long-term prospects of China extremely interesting.

The following positions represented the noted percentages of Alger’s assets under management as of November 30, 2018: Meituan, no holdings; WeChat, no holdings; Alibaba, 0.96%; Alipay (owned by Ant Financial), no holdings.

The views expressed are the views of Fred Alger Management, Inc. as of January 2019. These views are subject to change at any time and they do not guarantee the future performance of the markets, any security or any funds managed by Fred Alger Management, Inc. These views are not meant to provide investment advice and should not be considered a recommendation to purchase or sell securities.

This material must be accompanied by the most recent fund fact sheet(s) if used in connection with the sale of mutual fund shares.

Risk Disclosure: Investing in the stock market involves gains and losses and may not be suitable for all investors. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Many technology companies have limited operating histories and prices of these companies’ securities have historically been more volatile than other securities, especially over the short term. Technology companies may also face increased competition, government regulation, and risk of obsolescence due to progress in technological developments.

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