Quantum concept "rises," can Hong Kong stocks take advantage of the momentum?

The history of humanity is undoubtedly a history of technological innovation.

From the primitive times of eating raw meat to today's modern life, every step forward in human society has been accompanied by continuous technological innovation. For example, during the First Industrial Revolution, humanity entered the steam age. In the Second Industrial Revolution, humanity entered the electrical age. In the Third Industrial Revolution, humanity entered the information age. So, what is the Fourth Technological Revolution? What will it bring?

According to rumors, breakthroughs in high-temperature superconductors, quantum computers, super storage devices, nuclear fusion, super high-speed rail, and cures for AIDS and cancer? If we can achieve breakthroughs in just two or three of these areas and solve energy or computing power limitations, we can consider the new technological revolution has arrived.

The capital market has always favored "new stories." The market is clearly looking forward to the arrival of the "Fourth Industrial Revolution."

Last week, after Google announced the launch of the significant quantum chip Willow, quantum computing stocks have recently attracted much attention.

Overnight, on December 17th Eastern Time, U.S. quantum computing concept stocks surged, with Quantum Computing (QUBT) closing up 52%, D-Wave Quantum (QBTS.US) rising 16%, and Rigetti Computing (RGTI.US) increasing by 32.03%.

On December 18th, A-share quantum computing stocks also responded, with Geer Software (603232.SH) hitting the daily limit, QuantumCTek (688027.SH) rising 8.57%, and Keda Guochuang (300520.SZ) following with a 5.04% increase.

In this regard, Bank of America analysts pointed out that although the application of quantum computing is still in its early stages, the release of Willow has had a significant impact on market sentiment. U.S. Senator Maria Cantwell (Democrat from Washington) stated, "Advancements in quantum science and technology will change the game. From breakthroughs in healthcare to clean energy solutions, quantum applications in sensing, computing, and communication will reshape our future."

While it is still uncertain whether quantum computing can reshape the future, it is certain that it has already reshaped the "future" of related concept stocks—IONQ (IONQ.US), as the leader in U.S. quantum technology concept stocks, has seen its stock price increase nearly fourfold since September 26. QuantumCTek, as a leading enterprise in A-share quantum technology, has also achieved a doubling of its stock price since early September.

Next, we might as well take a look at the upward trend of these concept stocks to gain insights into the development opportunities of this technological wave.

Strategic Importance Highlighted, Market Size May Reach Hundreds of Billions by 2030

Quantum technology has been around for over a century. The modern information technology, computers, communications, and global positioning systems developed by humanity in the process of advancing quantum science are all closely related to the application of quantum technology.

Quantum technology mainly includes quantum computing, quantum communication, quantum detection, quantum sensing, and quantum metrology, all of which are recognized as potentially having a disruptive impact on various industries and fields.

For example, quantum communication can partially replace traditional communication encryption technologies, achieving unconditional key security; quantum computing can break through the physical limits of traditional chips, achieving computing power that is a million times faster than traditional computers;Quantum radar made using quantum detection technology can achieve anti-stealth detection, breaking the operational advantages of stealth weapons; quantum sensors have ultra-high sensitivity and microscopic sizes, capable of outputting precise positioning, navigation, and timing information in GPS-denied environments; quantum metrology can replace physical standards with natural benchmarks based on quantum physics, achieving extremely high measurement accuracy.

That said, quantum technology is still in the early stages of development.

This also indirectly highlights the "value" of Google's "Willow" chip. According to Zhitong Finance APP, this quantum computing chip from Google can complete a task that the fastest existing computer would take 10 yottayears (10 to the power of 25) to finish in just 5 minutes, while also possessing outstanding error correction capabilities. Currently, high fault tolerance has been a major obstacle to the advancement of quantum technology, so the birth of "Willow" can be said to pave the way for the development of "practical large-scale quantum computers."

As the strategic importance of quantum technology becomes increasingly prominent, multiple countries have begun to increase their investment and attention to quantum research and development.

Since the 14th Five-Year Plan, quantum technology has appeared at least 12 times in national-level planning and documents in China. In the Central Economic Work Conference in December 2023 and the government work report in March 2024, quantum technology was identified as an important track for promoting new quality productivity.

In addition to China's increased investment in quantum technology, countries around the world have been accelerating their planning and layout in the field of quantum information over the past five years. According to a statistical report from the China Academy of Information and Communications Technology, six countries successively released national strategies and investment plans related to quantum information in 2023, with a total planned investment scale reaching $6.7 billion.

As the government continues to increase its layout in quantum technology, the capital market's enthusiasm for quantum technology is also rising. According to ICVTA&K data, the total financing scale for global quantum technology from 2020 to 2023 was $2.12 billion, $2.91 billion, $3.39 billion, and $1.90 billion, mainly concentrated in the field of quantum computing. In 2023, China's financing scale in the quantum computing field accounted for 8.1% of the global total.

Of course, the speed of market expansion for quantum technology is undoubtedly significantly greater than the scale of financing.

According to ICVTA&K's forecast, the overall market size of the global quantum industry in 2023 may reach $7.24 billion, with computing, communication, and measurement accounting for $4.7 billion, $1.08 billion, and $1.46 billion, respectively. By 2030, the global quantum industry market size could reach $239.1 billion, corresponding to a compound annual growth rate of 65%, with computing, communication, and measurement accounting for 2,15.5 billion, 19.7 billion, 3.87 billion USD.

From the above data, it is clear that the development potential of the quantum technology segment is undoubtedly the largest among the three. Currently, the industry believes that late 2027 to early 2028 may be a milestone for quantum computing. In terms of market size, the global quantum computing market could reach 43 billion USD by 2028, becoming closer to the general-purpose computing of current electronic computers or becoming the main driver of industry growth after 2028. By 2035, the global quantum computing market could reach 811.7 billion USD.

It can be seen that with the continuous breakthroughs in quantum technology, there is ample possibility for the next decade to become the "golden age" of quantum technology.

The future of the industry is promising; which Hong Kong stocks in this sector are worth paying attention to?

When refined to three major fields, the development speeds of quantum technology, quantum communication, and quantum measurement are all different.

Currently, in the field of quantum communication, Quantum Key Distribution (QKD) has the conditions for "integrated ground and space" wide-area network engineering realization and is in the stage of large-scale application promotion. Quantum secure communication networks have been elevated to the national strategic level by several countries and regions, and both domestic and international efforts are ongoing in product integration upgrades, application fusion innovation, and standardized system construction.

In the field of quantum computing, several quantum computing prototypes have already demonstrated "quantum superiority" on a few specific problems, but they are still in the basic research stage and cannot yet solve complex problems of practical value. Achieving dedicated quantum computers first, followed by general-purpose quantum computers, is a global consensus, and the related supply chain market, complete machine sales market, and related application exploration market are accelerating development.

In the field of quantum measurement, a number of products such as quantum radar and atomic gravimeters have been formed, which can enhance the measurement accuracy of various physical quantities such as time, position, acceleration, and electromagnetic fields. It is currently in the practical transformation stage, undergoing varying degrees of engineering exploration in multiple technical routes and application scenarios.

Overall, although the current deployment of quantum communication and quantum measurement is relatively more mature than quantum computing, with some already in the promotion stage, from the perspective of market space, quantum computing is still the most imaginative.

From the industrial chain perspective, the upstream of quantum computing mainly includes components such as lasers and dilution refrigerators, the midstream includes prototypes and system software, while the downstream includes cloud platforms and applications in vertical fields such as finance and artificial intelligence. Among this industrial chain, the Hong Kong stock concept stocks are not many, mainly covering midstream software like Baidu (09888), downstream simulators like Alibaba (09988), and downstream application exploration like China Mobile (00941).

The upstream of the quantum communication industrial chain mainly includes chips, photon sources, single-photon detectors, and quantum random number generators. The midstream mainly includes core equipment, quantum communication network construction, encryption network operation, and post-quantum cryptography. The downstream mainly consists of security, finance, communication, power grids, and mobile terminals. The Hong Kong stock concept stocks in the quantum communication chain are also few, including China Mobile (00941) and China Telecom (00728) in the midstream encryption network operation; in the downstream finance sector, Bank of China, China Construction Bank, and Bank of Communications; and in the communication sector, China Telecom, China Mobile, and China UnicomIn addition, the upstream of the quantum measurement industry chain mainly includes lasers, low-temperature systems, materials, electronic components, and magnetic environments. The midstream mainly includes mature commercial products such as atomic clocks and atomic gravimeters, as well as prototypes of quantum magnetometers and optical quantum radars that are in the engineering research and development and application stages. The downstream application fields mainly include national defense and military industry, aerospace, environmental monitoring, industrial manufacturing, biomedical, transportation, and energy development. Currently, there are no obvious related concept stocks in the Hong Kong stock market within this industry chain.

It is worth noting that QuantumCTek is a leading enterprise in China's commercial quantum information technology, and thus has attracted significant capital attention during this wave of quantum technology hype. QuantumCTek originated from the University of Science and Technology of China, and since its establishment in 2009, the Asset Management Company of the University of Science and Technology of China has been its largest shareholder. Since 2020, the company has ventured into quantum computing, providing products for multiple superconducting quantum computing teams through independent research and participation in major projects such as the "Zu Chongzhi" experiment of superconducting quantum computing at the University of Science and Technology of China.

On November 21, 2024, China Telecom Quantum Group plans to subscribe to 22,486,600 shares of the company’s non-public offering for 1.775 billion yuan, which has been approved for registration by the China Securities Regulatory Commission. After the subscription is completed, China Telecom Quantum Group will hold approximately 21.86% of QuantumCTek, making it the controlling shareholder of QuantumCTek. Therefore, China Telecom can be considered to have a "dual label" in quantum technology.

In summary, it is not difficult to see that although quantum technology has not yet sparked the "fourth industrial revolution," the innovation and breakthroughs in quantum technology have already stirred up a wave in the secondary market, and investors who have always liked to "pan for gold" are clearly eager to act