asia

Indonesia: The most underappreciated country in South East Asia? – October 2020

  • Indonesia has exciting long-term structural advantages, which have been
    forgotten by investors
  • We expect an economic upturn due to both monetary and fiscal stimulus,
    coupled with major structural reform which could be a powerful catalyst
  • This is not reflected in market valuations, and thus we can readily identify
    attractive well-run companies
  • Indonesia is therefore one of our greatest differentiators versus peers and indices


Investing in Higher ESG Risk companies: Antofagasta

We believe it is possible and necessary to invest in higher risk segments, so long as the ESG performance is excellent and that the companies show continuous improvement.
We have compared our holding Antofagasta with regional and global peers across many ESG factors, to demonstrate where the company sits relative to global best ESG practice.


Investing in Higher ESG Risk companies: The cement case

We believe it is possible and necessary to invest in higher risk segments, so long as the ESG performance is excellent and that the companies show continuous improvement.

We have compared our holdings in Ultratech and Heidelberg Cement with regional and global peers across many ESG factors, to demonstrate where our companies sit relative to global best ESG practice.


Webinar – Will Emerging Markets’ strong performance continue?

We explored:

1) Why Q2 2020 saw EM outperform DM and the outlook for the remainder of 2020

2) What impact the US election, HK security law and recent tensions between China & India may have for EM equities?

3) New investment ideas and how these and our portfolios are aligned with the UN Sustainable Development Goals


India: Is the recovery here?

  • Although economic growth was suboptimal in CY2019 at 5.3%, 2020 began strongly with PMI data in Q1 reaching 8-year highs
  • Coronavirus has delayed this turnaround, but not destroyed the green shoots emanating from rural areas
  • The government stimulus package remains underappreciated by the stock market
  • Reform momentum has restarted
  • Although there are risks to our thesis, we believe that they are well-managed at this juncture
  • Our primary focus remains on companies that will benefit from domestic, particularly rural, opportunities providing exposure to an uncorrelated source of growth versus the expected recession in Developed Markets
  • The increasing geo-political tension between China and USA could provide economic opportunities for India over the medium term
  • Given the favourable structural characteristics of India (e.g. demographics, and the shift from the informal to formal economy), the positive near-term outlook and compelling valuations, we believe that this is an exciting, less-correlated opportunity for the long-term investor


future world

China: Leading the global recovery? – April 2020

  • China was the first to suffer with coronavirus, and we expect China will be the first to exit the crisis
  • Although China is a major global manufacturing hub, exports only account for 20% of GDP and domestically driven demand is more important
  • Government stimulus has already been significant, but the incremental nature of the announcements has led to an underappreciation of the magnitude of the package
  • China is the largest part of our portfolios, representing 29.7% of Alquity Asia and 28.4% of Alquity Future World. We are invested predominantly in domestically-driven stocks

Shanghai

Asian Small Cap stocks: about to rise like a Phoenix? – March 2020

In this article, we examine the investment case for Asian small cap stocks which have recently been out of favour with investors. We start with an analysis of the key drivers that resulted in small cap Asian stocks delivering stronger returns than large caps at various points in time after the Global Financial Crisis (GFC). We use the FTSE Asia Pacific ex Japan ex Australia ex New Zealand All Cap and Small Cap indices for the analysis.

We find that the Chinese yield curve has been one of the most prominent drivers of the (out)performance by small caps. There is a strong parallel with the current environment, where we expect that central banks will continue to shift to an increasingly accommodative monetary policy stance, which will contribute to the strength of domestic economies and in turn benefit small caps once again. This is combined with compelling valuations and increasing signs of deglobalisation, further strengthening the arguments for investing in Asian small caps.