Emerging market fund stock picks coming from fund managers this week include (among other stocks getting mentions later in this post):
- A Chinese industrial automation stock pick in the process of consolidating the domestic robot space.
- The leading Chinese laser and laser equipment manufacturing stock.
- A commercial stage early leader in the Chinese biotech sector based in both the USA and China plus has a strong pipeline of drugs coming.
- China’s largest supplier of medical devices who are active in nearly 40 countries around the world.
- The main Korean shipbuilding stock picks who fall under energy transition investing themes as they build cleaner and lower cost LNG powered ships.
- One of the Korean battery stock players who has faced headwinds that a fund feels are increasingly priced in.
- An Indonesian mining stock with one of the largest undeveloped copper deposits in the world plus an important gold mine.
- A number of key large cap Indian stocks in various sectors along with several smaller or lesser known (to foreigners…) Indian stocks – including a home grown manufacturer providing manufacturing and design focused solutions in the consumer durables sector.
In our March 21st post, one fund explained how “getting China right” will almost certainly be the single most important factor going forward for them. Their strategy is to identify the next Asian Warren Buffet or Peter Lynch who have on the ground experience investing in China (plus share the same investing philosophy) and to allocate them funds to invest.
Instead of following the international fund herd into a few large cap stocks, these local fund managers generate original investment ideas involving well-managed smaller and medium-sized Asian or Chinese stocks based on their own extensive research and due diligence.
For this week’s post, we have a fund who’s China stock picks fall under one of a couple of themes they have for the country. They also follow the same strategy for their India stock picks.
In addition, a newly created fund focused on investing in stocks that will benefit from the so-called global energy transition is also (more or less…) investing according to “themes” (albeit they simply refer to them as sectors…).
Interestingly enough, a common investing theme for picking stocks in China, India, and the so-called global energy transition are those directly involved in doing more advanced manufacturing at home or helping to achieve this through automation solutions (which, for ESG investors, can lead to more energy-efficient manufacturing).
Likewise, the Western media regularly discusses how China is trying to move up the manufacturing value chain and how Apple is moving some of their supply chain to India. What has been overlooked is how the domestic Indian market itself is moving away from imported electronics towards those manufactured by homegrown companies and brands who are also moving up the value chain.
Finally, the fund manager for another India focused fund discussed in a fund podcast update about how they pick Indian stocks. While they are not exactly investing according to the same sort of themes like the previously mentioned funds, they look for quality companies with strong pricing and good brand loyalty who are also the best operators with the best financials, industry leading margins, and trustworthy management teams.
The fund manager noted how India has many such quality companies – often family owned with strong balance sheets and tied into the country’s long term growth story. She also mentioned how their closed-end fund structure means they can explore the whole spectrum of market caps available as they don’t need to manage daily cash flow to cover redemptions.
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