Capital IdeasTM

Investment insights from Capital Group

Tomorrow’s innovation, today’s opportunities
Christopher Lee
Investment Analyst
David Cummins
Investment analyst
Harold La
Portfolio Manager

An innovative company is one that consistently produces a unique product or service that is not easily replicated by other companies. It also has the ability to drive the product or service towards long-term business growth and profitability. Unlike inventors, innovators are essentially people who take great ideas and convert them into great products.

The geography of innovation continues to evolve. Countries like the US and China have established innovation ecosystem are fuelling innovation catalysts and triggering world-changing innovation. The ingredients of a successful innovation ecosystem are what our analyst call the 5 Cs: connectivity (online communications), capital (money to invest), courage (risk appetite to invest), concentration of expertise, and channels (exit channels like IPO or M&A).

Innovation remains a critical driver for success today

Innovators have outperformed the market through consistent growth and value creation

Innovation remains a critical driver for success today

Past results are not a guarantee of future results.
Source: May 2023, Most Innovative Companies 2023, BCG. Chart compares 50 Most Innovative Companies’ one-year total shareholder returns (TSR) for that year against MSCI World. Top 50 companies are reweighted annually to reflect changes to the list.

During the early days of the internet, we witnessed the birth of Alibaba and Baidu, which were dubbed the eBay and Google of China. What followed was a material platform shift to mobile. At that time, China had already developed an ecosystem with the 5Cs, which underpinned the creation of world-changing innovation in mobile e-commerce, super apps and short videos.

In the US, many companies have been able to navigate regulatory risks in the past decades through a combination of a strong legal team, political gridlock, and luck. With successful innovation ecosystems in place, we should continue to see future innovation coming from both the US and China.

Looking ahead, it is important to focus on how companies retain their DNA and the qualities that made them great despite the major cost-cutting measures. These companies have the potential for a longer growth runway. A higher rate environment has indeed caused much financial pain. But it has also made companies more focused, leaner, and think of ways to generate returns at a faster pace. In this tough environment, it becomes clearer which companies are improving faster than the others.

Christopher Lee is an investment analyst at Capital Group with research responsibility for U.S. pharmaceuticals and biotechnology. He has 15 years of investment industry experience, and has been with Capital Group for eight years. Prior to joining Capital, Chris worked as a portfolio manager/analyst at Franklin Templeton. He holds a doctor of medicine degree from Columbia University-College of Physicians and Surgeons and a bachelor's degree in molecular biophysics and biochemistry from Yale University. Chris is based in Los Angeles. 

David Cummins is an equity investment analyst at Capital Group with research responsibility for Asian internet companies. He has 12 years of investment industry experience and has been with Capital Group for eight years. Earlier in his career at Capital, David also covered health care equipment in Australia and New Zealand, as well as Australian small- and mid-cap companies as a generalist. David began his career at Capital as an MBA summer intern in London researching the aquaculture industry. Prior to joining Capital, David founded a travel-related internet startup and worked as a venture capitalist in Silicon Valley and China. He holds an MBA from the Wharton School of the University of Pennsylvania and a master’s in international studies from the Lauder Institute at the University of Pennsylvania. David is based in Singapore.

Harold La is an equity portfolio manager at Capital Group. He has 25 years of investment industry experience and has been with Capital Group for 24 years. Earlier in his career, as an equity investment analyst at Capital, Harold covered Indian IT services, Asian semiconductors, Korean small-cap companies, Asian banks and diversified financials. Prior to joining Capital, Harold was an auditor at KPMG. He holds an MBA from Kellogg School of Management at Northwestern University and a bachelor’s degree from the University of Western Ontario. He also holds the Chartered Financial Analyst® designation. Harold is based in Hong Kong.

Hear from our investment team.

Sign up now to get industry-leading insights and timely articles delivered to your inbox.

By providing your details you are agreeing to receive emails from Capital Group. All emails include an unsubscribe link and you may opt out at any time. For more information, please read the Capital Group Privacy Policy

Past results are not a guarantee of future results. The value of investments and income from them can go down as well as up and you may lose some or all of your initial investment. This information is not intended to provide investment, tax or other advice, or to be a solicitation to buy or sell any securities.

Statements attributed to an individual represent the opinions of that individual as of the date published and do not necessarily reflect the opinions of Capital Group or its affiliates. All information is as at the date indicated unless otherwise stated. Some information may have been obtained from third parties, and as such the reliability of that information is not guaranteed.

Capital Group manages equity assets through three investment groups. These groups make investment and proxy voting decisions independently. Fixed income investment professionals provide fixed income research and investment management across the Capital organization; however, for securities with equity characteristics, they act solely on behalf of one of the three equity investment groups.