(Bloomberg) -- It’s been a tough week for some Chinese tech stocks, but foreign investors still can’t get enough of Hangzhou Hikvision Digital Technology Co., betting it will thrive as China invests in mass surveillance.
Some 29 million Hikvision shares were bought on a net basis via the Hong Kong-Shenzhen trading link this week through Thursday, even as a U.S. ban on ZTE Corp. rattled the market. Investors using the Shenzhen trading link own 11 percent of the surveillance camera maker’s outstanding shares, more than any other company and up from less than 5 percent a year ago, Hong Kong exchange data show.
Demand from offshore hasn’t prevented Hikvision’s shares from tumbling 6 percent this week, reflecting a divergence in views with mainland investors. The bulk of the drop happened Tuesday, after the U.S. move on ZTE, in which trading has been suspended in Hong Kong and Shenzhen for the past four days. China International Capital Corp. said the sell-off following the ZTE news was an overreation as Hikvision has limited reliance on U.S. components.
The domestic market remains the key driver, even as Hikvision expands globally -- 29 percent of its revenue came from overseas in 2016. The company is well placed to outperform as China plans to add 400 million surveillance cameras through 2020, according to Morgan Stanley.
Hikvision’s shares have more than doubled since December 2016, when the Shenzhen stock connect link opened, allowing foreign investors to directly buy shares listed in the southern Chinese city via Hong Kong.
©2018 Bloomberg L.P.
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