How to invest in DRs (Depositary Receipts) for Chinese or US tech stocks to get the best returns.

Opening the Door to the Global Stage: DR (Depositary Receipt) – A Shortcut to Investing in the Global Technology Battlefield. The technological war between the Chinese Dragon and the US Eagle: Who's the better team? Risky but Cheap vs. High-Growth Markets: Two Different Markets. Strategies to Win the Battlefield: Planning Your DR Investment Strategy in the Global Technology War.

Over the past decade, technology stocks have consistently demonstrated their ability to outperform traditional economy stocks. This is evident in the MSCI ACWI Information Technology Index, which consistently outperforms the overall MSCI ACWI Index for technology stocks worldwide. Similarly, in the US market, the S&P 500 Information Technology Index, representing large US technology companies, has outperformed the S&P 500 Industrials Index, which reflects old economy stocks. This global phenomenon reflects that recent stock market growth has been primarily driven by technology stocks.

Total return (Total Return Index Technology stocks worldwide and in the US can generate higher returns than individual stocks. Sector Others in general.

Source: Yahoo Finance, data from January 1, 2016 to May 30, 2026.

The rapid growth of technology stocks over the past decade is not accidental, but the result of strategic competition between the two global superpowers, the United States and China. The US, as a long-standing global leader in technology and the birthplace of key innovations like AI, cloud computing, and semiconductors, seeks to leverage this advantage to create an S-curve – core businesses – to drive economic growth, maintain its leadership, and distance itself from its rival, China. Meanwhile, China is aggressively developing its technology to reduce its dependence on foreign innovation and capital – a crucial geopolitical strategy. China's long-term goal is to transform from the "world's factory" to a full-fledged "technology owner."

The result of these two opposing forces is the creation of a "global technology battlefield" that not only accelerates technological and innovative development but is also inextricably linked to international economic and political issues. However, for global investors, this is not just a competition between two superpowers, but a massive "investment opportunity" stemming from the investment capital and profit growth driven by technology companies and numerous other companies in the supply chain from both the United States and China.

From the perspective of Thai investors, this opportunity is no longer distant. Currently, hundreds of leading technology companies from both countries are listed as Depositary Receipts (DRs) and are available for trading on the Stock Exchange of Thailand. This allows investors direct access to the "global technology battlefield" through their investment portfolios. However, the crucial question is: under this intense competition, where should we invest? What types of companies will win and generate the best returns? Before we delve into the answers at the end of this article, let's start by understanding the overall picture of technology stocks from both the US and China.

The technological battle: "China's Dragon" vs. "US Eagle" - who is superior?

A key question for investors like us is: How can we benefit from the global tech battle between these two superpowers? But before we can answer that, we need to understand the players in this arena: who's who and who has the upper hand.

Let's start with China. The main strength of China's technology industry, in a broader sense, lies in Applied Tech, or the practical application of technology and the creation of a domestic ecosystem through economies of scale, leveraging its population of over 1 billion people. Leading Chinese tech companies often excel in e-commerce (e.g., Alibaba, JD.com), digital content (e.g., Tencent, Baidu), and electric vehicles (EVs) (e.g., BYD, Geely). However, where China may still lag behind the United States is in core technologies such as chips, semiconductors, and AI models. Furthermore, China faces higher regulatory risks compared to the US.

On the US side, the overall strengths of US tech companies lie in AI models, semiconductors, and software development, which form the foundation and core structure of the global tech industry and future businesses. The US has prominent tech companies in areas such as Cloud & Enterprise Software (e.g., Google, MSFT), Semiconductor & AI Infrastructure (NVIDIA, QCOM), E-Commerce (AMZN), Social Media (Meta), and Software (ADBE, ORCL).

It is evident that both superpowers have their own strengths. However, when measuring performance in terms of business profitability and stock investment returns, it is clear that US tech companies outperform their Chinese counterparts. This is supported by the 162% return of the XLK ETF, which represents US tech companies, over the past five years.

While the CQQQ ETF, representing Chinese tech companies, experienced a -36% loss during the same period, the outlook for Chinese tech companies has improved, particularly over the past year, following a decrease in regulatory risk and the launch of Deepseek, which prompted global investors to question the value of the massive investments in US tech companies.

The historical total return of the XLK ETF has consistently outperformed the total return of the CQQQ ETF.

Cheap but risky vs. Growing but expensive: Two contrasting markets.

Overall, Chinese technology stocks continue to trade at significantly lower valuations than US tech stocks. Using the CQQQ and XLK ETFs as representatives, CQQQ's forward P/E ratio is approximately 21x and has fluctuated between 9-35x over the past five years, while XLK has a forward P/E ratio of approximately 36x and has fluctuated between 22-36x. However, the "cheaper" valuation of Chinese tech stocks doesn't automatically mean they are superior. Rather, it reflects their inherent risks, including government policy uncertainty, geopolitical tensions, and limitations on capital flow compared to the more open US market, which serves as the global financial center. These factors contribute to the "Chinese Discount," meaning that global investors are undervaluing Chinese tech stocks compared to US tech stocks.

Conversely, US technology stocks, while appearing "expensive" in terms of valuation due to market investors' high assessments of their growth potential and outstanding profitability—a clear example being NVIDIA, which traded at a forward P/E ratio of around 60x in 2023—have continued to rise due to over 300% profit growth in just 12 months. This reflects that "high valuation" doesn't necessarily mean a stock is expensive or unattractive, as long as the company can achieve or exceed market expectations in profit growth. Therefore, for investors, the key isn't simply choosing to invest based on "cheap" stocks or avoiding "expensive" ones, but rather understanding the reasons behind the market's different valuations of various stock groups. This leads to more effective stock selection and investment strategies.

Winning the Battlefield Strategy: Planning Your DR Investment In the global technology battle.

From the perspective of the Equity Solution team specializing in international equity investments at Kiatnakin Phatra Securities, we continue to overweight US technology stocks compared to Chinese tech stocks. This reflects our confidence in the long-term growth potential of US tech companies, which remain leaders in innovation, particularly in AI, Cloud, and Semiconductor – the "core" of the modern economy. However, this overweighting doesn't mean overlooking opportunities in the Chinese market, as Chinese tech stocks also have strengths, such as strong earnings growth and positive outlooks for many companies, a shift from a risk factor to a supportive one by the Chinese authorities, and attractive valuations.

In terms of portfolio management, the appropriate approach is to “systematic diversification” using US tech stocks as the core of the portfolio. The Global Core Portfolio, a recommended investment portfolio by the Equity Solution team, allocates approximately 30% of the portfolio to US tech stocks, while Chinese tech stocks are at around 4%.

This allocation strategy allows investors to “ride the wave of global growth” through the US market while maintaining exposure to China without taking on excessive risk. Recommended DRs for US tech stocks include AMZN06, AMZN01, AMZN03, AMZN23, AMZN80, NVDA06, NVDA01, NVDA03, NVDA19, NVDA23, NVDA80, MSFT06, MSFT01, MSFT03, MSFT019, MSFT23, MSFT80, META06, META01, META23, META80, GOOG06, GOOGL01, GOOGL03, GOOG23, GOOG80, AVGO23, AVGO80, etc., while the recommended Chinese tech stock is TENCENT06.

In summary, the global tech market presents a major investment opportunity easily accessible to Thai investors through DRs (Depositary Receipts). US tech stocks appear to be outperforming, but Chinese tech stocks are not being overlooked.

In short, the global technology battle between the United States and China has created significant investment opportunities for investors worldwide, stemming from the projected growth in technology companies' profits and the diversification of investment funds into various companies within the supply chain. Past returns and future earnings trends indicate that US technology stocks are poised for growth.

Thai investors appear to outperform Chinese technology stocks, particularly in areas such as AI models, semiconductors, and software development. These opportunities are accessible through convenient DRs (Depositary Receipts) that can be traded directly within existing Thai stock accounts. Kiatnakin Phatra Securities' Equity Solutions team recommends several attractive DRs, including AMZN06, NVDA06, MSFT06, META06, GOOG06, AVGO23, and TENCENT06.

Article by Pavarit Phuriwetkunakorn, Director, Securities and Futures Trading Department, Kiatnakin Phatra Securities.

source setinvestnow