Asian market proves its worth with three picks
The growing importance of Asia was evident at the Sohn Hearts & Minds Investment Leaders Conference, with fund managers tipping three Hong Kong-listed shares.
The growing importance of Asia was evident at the Sohn Hearts & Minds Investment Leaders Conference, with fund managers tipping three Hong Kong-listed shares.
Fund managers tipped one of the city’s largest conglomerates, Swire Pacific, which has a part interest in Cathay Pacific, insurance group AIA, and Japanese-inspired lifestyle retailer Miniso.
Fund managers argued that the shares are worth a buy because of increasingly affluent Asian consumers, with shares on the Hong Kong market held down at the moment because of investor wariness about longer-term prospects for the city.
Prusik Investment Management managing partner and chief investment officer Tom Naughton said Swire, which has businesses in property development, aviation, marine services, beverages and trading, was a “value pick”.
He said the stock was “not something people were getting excited about at the moment” but its current low price meant that “you get paid an enormous amount of risk premium”.
He said the Hong Kong sharemarket was “very negative” at the moment, making the stock particularly cheap.
“We think the opportunity for making money (in the stock) is extremely exciting,” he said.
London-based emerging markets specialist Ashish Swarup recommended Hong Kong-based insurance company AIA.
Mr Swarup, who is the founder of Aikya Investment Management, said AIA was well placed to take advantage of the Asia’s ageing populations.
He said there was a rising middle class in Asia that was getting wealthier and older.
Meanwhile, there was also a “protection gap” in Asia, which had a need for more insurance and wealth management products.
“There is a growing need for financial planning,” he said.
Mr Swarup said AIA was a well-managed, well-run group that had a quality franchise and used its own agents to sell its products.
The company had retained its sales agents during the pandemic and attracted some of the best agents in the region because of its attractive reward structure.
“Its shares have never traded this cheaply before because of the poor sentiment around Hong Kong,” Mr Swarup said.
The stock had the potential for 50 per cent growth in coming years, with its share price being boosted by a “massive (share) buyback” scheme, he said.
Meanwhile Tribeca Investment Partners portfolio manager Jun Bei Liu, who was making her sixth appearance at the Sohn conference, said the Hong Kong-listed, Japanese-inspired lifestyle brand Miniso was set to boom as its core market, generation Z, was set to grow in the coming years.
Ms Liu said Miniso was a market leader with a proven concept and a “very powerful” supply chain, and was growing fast with more than 5000 stores.
“Very conservative estimates suggest that Miniso will more than double in size in just the next five years alone,” she said.
Ms Liu said lifestyle consumers aged between 10 and 25 were currently spending $8 trillion a year and were heavily influenced by TikTok and other social media trends, which Miniso had successfully tapped into.
“This demographic is less influenced by luxury brands and is much more impulsive about what they buy,” Ms Liu said. “They have the attention span of a gold fish and their tastes change by the day … what’s cute today is not what’s cute tomorrow.”
She said Miniso had tapped into this reality by adding hundreds of new products at rapid pace to its network of stores around the world.
FULL COVERAGE: 2023 Sohn Hearts & Minds Investment Leaders Conference
The retailer had partnered with local capital providers that financed the operation of the stores.
They were given access to Miniso’s expertise and its supply chain in return for a share of the store’s revenue.
Elsewhere, the vice-chair of venture capital firm B Capital, Sheila Patel, told a panel there was a divergence of views around investing in China. She said some investors were concerned at issues around the rule of law in the country, including the ability for them to get funds out of China.
Atule Lele, portfolio strategist with Bridgewater Associates, said he believed there were still lots of opportunities in Asia.
Additional reporting: Matt Bell
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