Moving East

For almost 2 decades, the US stock market was the place to be, both for domestic and overseas investors. This is not a new phenomenon, with the investing fortune of the US vs the world often moving around very long duration cycles lasting years or decades.

As the USA markets have been rising higher and higher, many have started to wonder when a return to other regions would be best, with many of the pessimists proven wrong so far, or maybe just too early.

And it seems that indeed, looking to other markets out of the USA might make sense. Besides the possibility of the cycle turning, rising geopolitical tensions, de-globalization in full swing, and a strong economic shock brought by Trump’s tariffs could all contribute to a downturn in the economy and financial markets.

At the same time, Asia as a whole is still booming, with SE-Asia quickly industrializing. As the 700 million people region is following the path previously taken by China, this could make the region the world’s economic center, after 5 centuries of Western prominence.

If that is so, investors might want to be positioned early in local tech companies that have a strong hold on the region’s consumer markets, or a unique competitive advantage in their niche.

1. Alibaba

The Chinese e-commerce giant is not only a force to recon with in China with its Taobao & Tmall websites (retail) and 1688 (wholesale), and is also Europe’s biggest online marketplace since 2023.

Its international presence includes wholesales (Alibaba), retail (AliExpress), and regional large e-commerce like Lazada active in SE-Asia (16.4% market share).

Source: Alibaba

Taking a page from Amazon’s playbook, Alibaba is also a major actor in cloud computing, with a larger share of the Chinese cloud market than its next 2 competitors together, the tech giants Huawei and Tencent.

Source: Jeff Townson

To support the other activities as well as increase profit, Alibaba also operates a logistical arm called Cainiao and owns 33% of Ant Group, Alibaba’s former financing/banking division.

Ant Group includes the very popular payment system AliPay, as well as various solutions integrated into a few super-apps for services as varied as online banking, wealth management apps, insurance, loans, food & medicine delivery, government services, mobility, etc.

Source: Medium

Alibaba is also at the forefront of creating a Chinese AI open-source ecosystem, with the community ModelScope (launched in 2022), the largest in China, using 2,300 AI models, based on Alibaba’s “Model-as-a-Service” initiative.

With ModelScope, we aim to simplify and reduce the cost of developing, customizing, and deploying AI models for developers and corporations, thereby enabling the creation of revolutionary AI applications that have a positive impact on society.

For instance, FaceChain, a third-party application based on multiple AI models on ModelScope, can generate a portrait from just one or two uploaded photos. We leveraged this model to help some elderly individuals in China develop digital portraits, which delighted them.

Zhou Jingren – Alibaba Cloud’s CTO

Alibaba also has its own extremely powerful LLM AI (Large Language Model, like ChatGPT), Qwen. Alibaba also announced in February 2025 a $53bn investment over three years to advance its cloud computing and AI infrastructure, in what has been described as an “All In AI” move.

Overall, Alibaba is one of China’s dominant tech companies, although under pressure from aggressive tech competitors like Temu, Tencent, and Huawei, or even newcomers like AI company DeepSeek.

It is nevertheless faring well in this very competitive environment so far, as it has a solid position in e-commerce, cloud computing, and AI. As a well-known international brand and a stock directly listed in the US, it is also an easy way for Western investors to get exposure to China’s tech scene.

(You can read more detail about Alibaba’s history and businesses in our dedicated article)

2. TSMC

Much before the rise of China as an economic and tech titan, the small island of Taiwan became the center of the world’s semiconductor industry. And this was in large part the doing of TSMC, the largest chip and semiconductor company in the world.

TSMC is the go-to partner for manufacturing services for “fabless” chip producers, including markets’ darlings like Nvidia (NVDA +2.37%).

By letting these chip designer keep their own design (contrary to companies like Intel for example (INTC +2.84%)), TSMC started to win more contracts and build the industry’s largest economies of scale and technical expertise.

Today, TSMC generates more than half of the revenues of the entire semiconductor foundry industry, with almost 4x the revenues of #2 Samsung.

Source: Eric Flaningam

A key reason for the massive share of TSMC revenues is that the company is the best in the world at producing the most advanced chip designs. Recently, this has mostly meant operating EUV (Extreme UltraViolet) machines produced by ASML (ASML +1.68%)

Today, the company is leading in the most advanced node, 3nm, and the upcoming 2nm is even more in demand, expected to be larger than 5nm and 3nm combined. Mass production of TSMC’s 2nm node is expected to start in 2025. It will likely be a tight competition with Samsung, which has also started preparing 2nm and 1.4nm production lines.

As Taiwan is at the center of geopolitical arguments between China and the USA, this stock could be vulnerable if the situation devolves into a full invasion of Taiwan. At the same time, such risk would likely have so wide consequences that TSMC would hardly be the only affected company.

TSMC is also courting US favor and de-risking by building semiconductor foundries in Arizona. After a slow start, the first scaled-up production should start in 2025 for the first fab, and production yield (the efficiency of properly engraved chips, a key industry metric) is now higher in Phoenix than in Taiwan.

(You can read more detail about TSMC’s history and businesses in our dedicated article)

3. SEA

While Chinese and Western e-commerce companies have a foothold in the SE-Asia markets, all are struggling to keep up with the local dominant actor: SEA.

The company started in the videogame industry and is still an important company in this sector through its  Garena branch. To this day, the “digital entertainment” part of SEA is the major profit driver, making up 2/3^rd of the total EBITDA.

However, it is Shopee, its e-commerce platform launched in 2015 which is now the center of the company, as this is where most of the future growth is expected to from.

It has also added to its quiver SEAMoney, a FinTech branch offering digital payment and financial services, like mobile wallets, loans, online payments, payment processing, etc.

Source: SEA

The e-commerce segment positively dominates its competition in SE-Asia, with more GMV (Gross Merchandise Value) than the next 3 e-commerce platforms combined, which include Alibaba-backed Lazada and TikTok.

Source: FintechNews

SEA is benefiting from the combined explosive growth of the company and its reinforcing dominant position, as well as the explosion of e-commerce in a region that until recently had poor Internet access and infrastructure.

SE-Asia countries have often displayed >5% growth rate in the past years, and are industrializing quickly. The region is benefiting from its proximity to China, as well as the outsourcing of some manufacturing industries out of China, leading industrialization and to a deeper integration into the global supply chains.

This has allowed the company to grow its GMV by an astonishing 73x times from 2016 to 2023.

Source: ECBD

The same opportunity that SEA has taken in e-commerce, it is now trying to seize in financial services. As more than half of the region’s population is unbanked or underbanked, this represent a massive market with no attachment to traditional banking, which is also getting wealthier as the region develop.

Source: Business Insider

As with other FinTech companies, the ability to outperform traditional banks is also a strong competitive advantage.

Dominic, Student: I used to pay for my online purchases through bank transfer, which usually took about 3 days before I received a confirmation message. But with ShopeePay, I get confirmation within just 10 minutes!

Vy, Young Professional: I don’t have to go to counters to pay my bills or wait in line to buy movie tickets anymore. This app makes my life a lot easier.

Sea Money Testimonials

Financial offerings are shaping to become another profit generator for SEA besides the gaming activity. Meanwhile, the e-commerce segment keeps growing at double-digits rate, with its (temporarily?) low profits mimicking the same situation that lasted in Amazon for years.

(You can read more detail about SEA’s history and businesses in our dedicated article)

4. Sony

Sony has been for decades one of Japan’s leading electronic consumer brands. From early radio and video tape recorders, it has become a global household name with products like the first Walkman, co-inventing the CD, and launching the PlayStation in 1994.

Source: Sony

Today Sony is still a giant in console gaming with 75 million units of the PlayStation 5 sold so far, and 129 million MAU (Monthly Active Users) of the PlayStation Network as of December 31, 2024.

While a PlayStation 6 is rumored, it is not expected to reach gamers before 2027, and this might signal the beginning of a weakening position for the PlayStation 5 until then.

Source: PlayStation

Sony is also a major content producer, with videogame IPs (Horizon, Ghost of Tsushima, or The Last of Us), a music label (Usher, Whitney Houston, Bob Dylan), and Sony Pictures Studios (Ghostbusters, Jumanji, Men in Black, Spider-Man).

Source: Sony

Less known to the larger public is the very strong presence of Sony in the image sensor market. Sony controls 42% of the CIS market (CMOS Image Sensor, where COS stands for Complementary Metal-Oxide Semiconductor).

Source: Edge Vision

This market is expected to keep growing at 5.1% CAGR until 2028, especially in the segment for automotive (8.8% CAGR), security (17.6%), and industrial (8.2%). As machine vision combines with edge computing AI, it is likely that more and more demand will be driven by drones and autonomous vehicles (or weapons), as well as robotic systems.

Source: Sony

Overall, Sony is a well-known brand with a massive reputation in the entertainment industry (videogame, music, movies) and an equally solid business as a semiconductors hardware manufacturer (image sensors and game consoles). As a Japanese company, it also has less exposure to international risks than Chinese or Taiwanese companies.

5. Jinko Solar

As solar is slowly becoming the dominant form of new energy generation added to our power system, China is dominating the industry.

What started from a relatively subsidized industry is now standing on its own thanks to industry experience, long-term investment, and economies of scale, with all other countries struggling to replicate even partially the country’s solar industry.

Jinko Solar has been a leader in pushing China’s dominance over solar panel manufacturing, notably with the advanced N-type panels displaying panels ranging from 27%-33.84% (silicon-perovskite tandem) efficiency.

Jinko has been the global #1 in annual module shipments for six out of the past ten years, having delivered more than 300GW of solar capacity since inception, the first manufacturer in the world to reach these numbers. Shipments for 2025 are expected to be in the 85.0-100.0 GW range.

Source: Jinko Solar

Jinko Solar has been an innovator in the industry, pioneering half-cell designs that reduce internal losses in a panel.

Source: Jinko Solar

It is also a leader in bifacial panels, a new type of design that is often installed vertically to produce more power in a more uniform fashion during the day (especially when oriented east-west) producing up to 20% more energy.

As the electric grids are somewhat saturated at noon from excess solar power, and are under-supplied at dawn and dusk times, this might become a growing trend for utility-scale solar farms to smoothen the daily production curve.

Source: Jinko Solar

Jinko is only moderately exposed to the US market, with only 8% of its panel going to North America. So even the massive quadruple-digit tariffs recently leveraged on Asian solar panels by the Trump administration should not have much of an impact.

Source: Jinko Solar

As solar panel prices declined and an intense price war broke out between Chinese manufacturers, Jinko Solar saw its profit decline to almost zero in 2024.

This also means that virtually any other producer without Jinko’s scale and experience is likely losing money. In the long run, this situation is likely to reinforce the competitive position of the largest solar panel producers, with the industry consolidating further.

Note On US-Listed Chinese stocks

Stocks of Chinese companies often have complex structures, due to Chinese laws technically forbidding foreign ownership. At the same time, Chinese companies (and the Chinese government) are eager to raise capital abroad to finance the growth of the country’s economy and its corporations.

A compromise was found with the VIE (Variable Interest Entity) structure. Often based in the Cayman Islands or directly in the US, these corporate structures have a contract with the mother entity (for example, Alibaba in China), guaranteeing part of the profits of the “real company,” replicating ownership, but without direct “real” ownership.

Source: Corporate Finance Institute

This structure is legal, but inherently less safe than direct listing. It is also vulnerable to geopolitical storms, with the delisting of Chinese companies a threat regularly discussed by US officials.

So investors in Chinese stocks should take this risk into consideration when considering investing in these companies, and maybe also consider non-Chinese companies as well.