We have a variety of emerging market fund stock picks (from US or international fund letters, articles or fund manager interviews) to highlight this week (among other stocks also getting mentions late on in this post) with some quick takes being:
- A Chinese hospital stock in a particular niche that will benefit from China aging population – and hopefully not be in the crosshairs of the latest corruption crackdown targeting pharma and healthcare.
- A Chinese snack company who’s products are made from nuts – something considered healthy and less likely to be in the crosshairs of a crackdown on unhealthy eating products.
- A Taiwanese testing stock pick that plays into semiconductor testing for AI purposes.
- An Asian auto parts stock pick with a global presence that was sold by the fund this post looks at, but could be a way to indirectly play into EV hype as it may not be as overvalued like so many other EV plays.
- A beaten down SE Asian retailer of home improvement type products. With COVID lockdowns done and ASEAN starting to benefit from nearshoring, shares are rising again.
- Two Asian cement stocks that could also be plays on nearshoring infrastructure construction or renewed growth.
- A listed Middle East stock exchange operator stock who’s business still has plenty of room to grow.
- A diversified South African industrial conglomerate that has expanded beyond the continent and is probably under the radar for most foreign investors.
- A couple of stocks that we have tear sheets for already that have also come up in some recent fund letters.
This post covers two podcast interviews with fund managers who talk about India (among other topics). One of these fund managers commented India how “always, always looks expensive” – except when sentiment about China is extremely positive (as then the foreign fund money flows there and Indian valuations get a little cheaper).
One reason given for the premium is that India has a wide range of listed private sector businesses and multinationals – something you don’t typically find in many other emerging markets (including China).
However, I would remind investors that Malaysia, Indonesia, Mexico and I think Nigeria as well have international MNCs who have their local units or JVs listed on local stock exchanges e.g. Heineken Malaysia (KLSE: HEIM), Wal-Mart de Mexico (BMV: WALMEX / FRA: 4GNB / OTCMKTS: WMMVY / WMMVF) and various British American Tobacco listings come to my mind.
In addition, the fund manager noted how India offers the potential for higher earnings and growth (albeit that has not always panned out). However, the point was made that while India’s macro picture might be great, you won’t see the benefits if you are invested in the wrong Indian stocks. This sort of logic probably applies to all emerging markets or, for that matter, hyped sectors or trends like nearshoring, China Plus One, and AI.
Speaking of nearshoring (or China Plus One), both fund managers agreed that it is happening and will benefit places like Asean or India. However, its probably not happening at the speed the western corporate media claims because more infrastructure needs to be built (and that’s where there are investing opportunities).
The same was said about AI as one fund manager believes that will benefit both Korea and Taiwan. But again, more infrastructure needs to be built and the supply chain needs to expand further. Neither of those things will happen over night.
And yet, some of our previous posts have noted or included stock charts of potential Taiwanese and Korean AI stocks or plays that (as our July 4th post detailed) remind me of the 3D printer stock bubble. The main difference being that hyped AI stocks (even those in Korea and Taiwan) seem to have much steeper upward trajectories – like the surviving 3D printer stocks who got nice bounces during COVID (only to fall back to earth):
Nevertheless, this post does cover a recent article about a fund who’s fund manager believes that emerging market telecommunications and IT servicing firms will benefit from AI adoption.
This sort of logic can also be applied to nearshoring. Instead of buying, for example, real estate logistics stocks or REITs which may have been bid up, look for sectors (e.g. cement) and stocks (e.g. cement stocks) that will indirectly benefit from nearshoring trends and the need to build more infrastructure.
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- EM Fund Stock Picks & Country Commentaries (July 25, 2023)
- EM Fund Stock Picks & Country Commentaries (June 27, 2023)
- EM Fund Stock Picks & Country Commentaries (August 22, 2023)
- Fund Manager Interview: Aberdeen India Fund (Aberdeen)
- EM Fund Stock Picks & Country Commentaries (September 5, 2023)
- EM Fund Stock Picks & Country Commentaries (September 26, 2023)
- EM Fund Stock Picks & Country Commentaries (May 23, 2023)
- EM Fund Stock Picks & Country Commentaries (June 13, 2023)
- EM Fund Stock Picks & Country Commentaries (August 1, 2023)
- EM Fund Stock Picks & Country Commentaries (July 18, 2023)
- Emerging Market Stock Picks, Tweets & Podcasts (December 2023)
- EM Fund Stock Picks & Country Commentaries (March 28, 2023)
- EM Fund Stock Picks & Country Commentaries (February 21, 2023)
- EM Fund Stock Picks & Country Commentaries (May 30, 2023)
- EM Fund Stock Picks & Country Commentaries (July 4, 2023)