Li Ka-shing-backed fintech company embraces market downturn as ‘good timing’

MioTech provides an investment management platform powered by artificial intelligence to help asset managers make better-informed decisions

PUBLISHED : Tuesday, 25 September, 2018, 7:01am
UPDATED : Tuesday, 25 September, 2018, 1:31pm

The recent volatility in China’s stock market may be the “good timing” that financial technology companies need to sharpen their focus on new business opportunities, according to Jason Tu Jianyu, co-founder and chief executive of start-up MioTech.

“When the market experiences a downturn, everyone is thinking about ways to technically differentiate themselves from their peers,” Tu said on Thursday on the sidelines of Google’s Demo Day in Shanghai, where MioTech was among 10 start-ups to make presentations. “Financial institutions in the Chinese mainland used to emphasise distribution and earning a quick bucks in the old days.”

Those institutions are now giving increased attention to data analytics, he said.

That trend has caught on amid China becoming one of the worst-performing stock markets in the world, with its benchmark Shanghai Composite Index plunging 15.4 per cent for the year to date on Friday.

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Tu said there are not many data aggregators in China, compared with markets overseas. That means the potential “will be huge for AI-empowered data crunching and analysis” in the domestic market, he said.

Greater domestic demand augurs well for MioTech, which provides an investment management system powered by artificial intelligence (AI) to help asset managers make better-informed decisions, as well for other fintech firms offering advanced solutions.

Trade tensions between China and the US, the world’s two biggest economies, have had an adverse effect on confidence and investment plans around the world, according to the latest Interim Economic Outlook of the Organisation for Economic Co-operation and Development.

That led to global trade growth slowing down in the first half of this year to 3 per cent, from 5 per cent a year earlier, the report said.

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“The stock market may still be volatile in the coming months because of the US-China trade war,” Samuel Lin Yanjun, the chief financial officer of mainland fintech company 9F Group, said earlier this month. Amid that market volatility, 9F has focused on expanding internationally by applying for a virtual banking licence in Hong Kong.

For MioTech, Tu said the company was open for a new round of fundraising to fuel its own expansion efforts, following its US$7 million Series A round last year that was led by Horizons Ventures – the private investment arm of Hong Kong’s richest man, Li Ka-shing.

The two-year-old start-up, which has offices in Hong Kong and Shanghai, declined to provide its current number of customers, except to describe these as having combined assets of about US$200 billion.

Tu, who once worked at Standard Chartered Bank in Hong Kong, said his previous job at the bank’s investment advisory department involved reading through stacks of newspaper and financial reports early in the morning to prepare for briefings every day.

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Those materials can now be prepared instantly and presented in a “visually intuitive” way, based on MioTech’s 175 million company profiles, including publicly listed firms on major exchanges.

The firm aggregates and analyses a wide spectrum of data sources, including market price, transactions, news, events, earnings releases, deal information, commentaries and social media. These are integrated into a graph database for asset managers to get more in-depth insights about investment opportunities.

Tu said MioTech employs more than 20 engineers and data scientists, making up about half of its workforce.

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“The system can bring cost reduction and higher efficiency,” he said. “More hands can be spared from doing deep dives of data and investment decisions.”

MioTech, however, has some US-based competition, such as Addepar and Kensho, that provide similar tools to Wall Street firms, helping the affluent know where to invest their money.

At the Demo Day in Shanghai, Google’s vice-president of product management, Bradley Horowitz, said the event offered exposure for start-ups to attract new funding.

“China is the land of unicorns,” Horowitz said. “If you look at what’s going on in start-ups, some of the most successful companies in the world have been created in China.”