A range of emerging market fund stock picks coming from US based fund managers this week (among other stocks getting mentions later in this post) include:
- A Chinese financial technology stock pick focused on and riding the fintech wave.
- A Chinese industrial automation component and solutions stock pick who has taken advantage of supply chain disruptions and is also moving up the value chain.
- A Taiwanese cloud infrastructure stock pick riding what is expected to be long term growth for cloud capital investments.
- A Korean battery stock pick who has a joint venture with a global automaker to build a new EV battery plant.
- An Asian confectionery manufacturer who already has some well known products sold globally. They are transforming into a global food and healthcare company.
- An Asian financing and leasing stock pick with operations in North Asia as well as ASEAN. China’s reopening has indirectly helped shares rise and remain stable.
- An Asia based shipping stock pick focused on shipping minor dry bulks that China will need more of when things start to normalize. They are modernizing their fleet while also taking advantage of higher asset prices to also sell assets.
- An Indian automaker well positioned to ride demand for more passenger vehicles at home and in other emerging markets.
- An Indian container handling and terminal operator stock who’s shares are back to pre-COVID levels and starting to perk up again.
- Some Asia hotel or casino stocks poised to take advantage of a slow return to normalcy.
- A couple of agribusiness related stocks, including a well known Singapore based group plus others based in India and Vietnam.
One smaller fund manager has said the quiet part out loud with an unusually frank discussion (that went into considerable detail…) about all the overhyped China reopening talk by brokers, strategists, economists, and business media pundits.
They pointed out how Chinese income (as mentioned yesterday: The Chinese Dream is dead because China’s Gen Z is flat broke, and they have the receipts to prove it) and employment growth have not been strong while economic growth and corporate results have not matched the hype.
None of this sort of realistic talk would ever be heard from a larger or more international fund manager with a direct presence in China (or for that matter, in Asia). Nor will it be heard from any fund manager who wants to be invited onto Bloomberg or CNBC – unless the China narrative has changed…
Likewise, investors who bought into the China reopening hype by buying ETFs, blindly following emerging market indices, or who were not careful about stock selection, will likely have a portfolio performance looking like the iShares MSCI China ETF chart:
Even the KraneShares CSI China Internet ETF tracking the “hot” internet or tech sector along with Alibaba (NYSE: BABA), who’s reorganization announcement sparked a mini-market bounce (that’s now fading), has put in a similar performance:
Again, China is not the only “emerging market” right now where significant value can be found.
For Example: One Fund’s covered in this post has a 6% allocation to Mexico. This is double that of the index and it also helped deliver outperformance as Mexican stocks have not been impacted by all the uncertainty involving China. In fact, Mexico are benefiting from China’s problems and increased nearshoring to limit geopolitical and supply chain risk.
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