The blockchain market in China is growing at a rapid pace, and it’s worth becoming familiar with these Chinese blockchain stocks.
It is China’s goal to become a global leader in the industry, and President Xi Jinping praised the technology at a conference in May 2018.
“The new generation of information technology represented by artificial intelligence, quantum information, mobile communication, internet of things, and blockchain is accelerating breakthroughs in its range of applications,” he said.
What’s more, The South China Morning Post reported in July 2018 that over 3,000 Chinese companies had added “blockchain” to their titles since the start of 2018, up from 555 total in 2017.
More recently, according to Forbes, 197 blockchain companies were approved by Cyberspace Administration of China regulators in April 2019. Hangzhou is one of China’s primary blockchain hubs.
Investor interest in the Chinese market has also increased — stretching even to North America — thanks to the launch of Blockforce Capital’s NASDAQ NexGen Economy China ETF (NASDAQ:BCNA) in June 2018.
The exchange-traded fund (ETF) offers US investors exposure and access that otherwise might not exist to China-based blockchain companies. It provides opportunities to enter a market that Blockforce Capital CEO Eric Ervin has described as “undervalued.”
As China is poised for long-term growth in the blockchain industry and well positioned to be a global leader, investors in the space should be familiar with the Chinese blockchain stocks that are driving the market, even if the only way for investors to gain exposure to them is through BCNA.
On that note, here is an overview of 10 Chinese blockchain stocks that are holdings of the BCNA ETF. While the ETF lists 40 constituents, the firms below have the highest weights. They are listed from largest to smallest as of June 5, 2019. Here’s a closer look at those 10 Chinese blockchain stocks.
1. Hundsun Technologies (SHA:600570)
Hundsun Technologies is the top company on the BCNA ETF with a 3.66 percent weighting.
The company trades on the Shanghai Stock Exchange and has a primary focus on software products and services in addition to data for financial entities, mostly in mainland China, Japan, the US and Hong Kong.
Hundsun Technologies invested in blockchain in 2017, when it formed a strategic partnership with startup Symbiont, a company that provides smart contracts for institutional blockchain applications.
2. Tencent Holdings (HKEX:0700)
With headquarters in Shenzhen, Tencent — with stakes in over 600 countries — was founded in 1998. The tech titan was approved by the Cyberspace Administration in 2019 to explore blockchain projects and developments. Tencent Baas (TBaas), the company’s anti-fraud blockchain service, is designed to authenticate invoices to prevent tax fraud and illegal billing.
TBaaS was developed in conjunction with the State Administration of Taxation in Shenzhen.
3. Heilongjiang Agriculture (SHA:600598)
Heilongjiang Agriculture was founded in 1998 and employs over 34,000 individuals. Its principal operations center around land contracting, real estate and selling agricultural products including rice, wheat, beans and corn. According to Yicai Global, in 2017 Heilongjiang Agriculture partnered with Jiangsu Zhongnan Construction Group to establish a blockchain platform for agriculture.
In addition, in May 2019, the company entered an agreement with Shineco to develop the largest hemp processing base in China.
4. Ping An Insurance Company of China (SHA:601318)
Ping An Insurance Company of China has a 3.37 percent weight on the BCNA ETF. It became the first Chinese company to join the R3 blockchain consortium back in 2016. R3 is a firm working on how blockchain can be applied in the financial markets.
In August 2018, the company revealed the “Ping An Smart City White Paper,” which promotes technologies like artificial intelligence, big data, cloud computing and, of course, blockchain.
5. GRG Banking Equipment (SZSE:002152)
GRG Banking Equipment is focused on researching, developing, manufacturing and distributing automatic currency processing equipment and system software.
The company’s products include automatic teller machines (ATMs), automatic fare collection systems and money sorters.
The company’s dip into the blockchain space includes introducing ATMs that provide exchange services for cryptocurrencies backed by blockchain. It has also created a digital asset management system, a blockchain-based VIP identity authentication system and a hard wallet.
6. JD.com (NASDAQ:JD)
In April 2019, ecommerce company JD.com released a whitepaper on how it is exploring blockchain technology. Through its fintech arm, JD Finance, the company is focusing on five areas in blockchain: value innovation, supply chain, trusted networks, digital evidence storage and financial technology.
The company has already launched blockchain solutions for the pharmaceutical and consumer goods industries, with applications to over 700 brands.
Additionally, the company has issued asset-backed securities on the blockchain. The underlying assets are based off of the accounts receivable of Baitiao, JD.com’s consumer loan service company.
7. Alibaba Group Holdings
Alibaba Group Holdings is an ecommerce, retail, internet, artificial intelligence and technology company with a focus on providing consumer, business and sales services through the internet and electronic payment services.
The company filed a blockchain patent application in January 2018 called “A System and Method That Adjusts Account Balance on a Blockchain” with the China State Intellectual Property Office. Through the patent, the company hopes to improve international transactions through a third party payment vendor.
Alibaba Group Holdings has a 3.19 percent weighting on the BCNA ETF.
8. China Merchants Bank (SHA:600036)
With over 500 branches, China Merchants Bank (CMB) is extending its existing blockchain services to tax invoices. CMB aims to provide invoicing services to clients that will be able to be completed in real time. The company further plans to apply blockchain invoicing solutions to small- and medium-sized businesses for invoice integration.
The company’s consumer financing department and China Merchants Fund are also applying this blockchain technology. CMB was the eighth largest bank in China by assets as of 2018, according to S&P Global Intelligence.
9. Industrial Bank (SHA:601166)
Commercial bank Industrial Bank was among the first joint stock commercial banks to be granted approval by the People’s Bank of China. Its services include deposits, loans, foreign currency exchange and credit inquiries. It operates over 119 branches.
China’s State Administration of Foreign Exchange is now undergoing a blockchain-based cross-border trial that includes Industrial Bank along with 13 other banks. The trial is anticipated to be among the most notable blockchain projects within this sector. Specifically, it is examining cross-border trade financing as it relates to small- and medium-sized businesses and blockchain application.
10. Aisino (SHA:600271)
Founded in 1994, Aisino is a software technology company that employs almost 18,000 individuals. Its principal operations are centered around value-added tax and integrated circuit services.
Tech giant Alibaba plans to work with Aisino on blockchain solutions to promote growth within the blockchain sector. This project is in tandem with further development of its cloud computing services.
Aisino operates in over 50 countries worldwide.
This is an updated version of an article originally published by the Investing News Network in 2018.
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Securities Disclosure: I, Dorothy Neufeld, hold no direct investment interest in any company mentioned in this article.