Emerging Asia has pulled out of the pandemic faster than many might have expected. Its outperformance relative to developed economies and emerging market peers is due to several factors. Its experience of dealing with past health crises – notably Sars – has allowed it to cope better with Covid-19.
What’s more, the bloc’s anti-crisis economic policies have been prudent and measured, in contrast to the West, where governments and central banks have been forced to take far more extreme measures.
Take China. Although it was at the epicentre of the pandemic, policymakers there have not had to resort to excessive fiscal or monetary largesse. The world’s second-largest economy has not experienced a build-up in borrowing on the scale of developed economies. For instance, it went into the crisis with public debt at less than 50% of GDP.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The picture is similar in the rest of emerging Asia, comparing favourably with G5-economies where the average debt-to-GDP ratio is expected to exceed 150% next year. Asia has managed to support growth without sowing the seeds of potential future financial shocks.
The economies of the regional heavyweights – China and India – are as diversified as the US, with a balanced mix of heavy industry and services sectors. Emerging Asia should be the fastest-growing region in the world this year, with GDP expanding by up to 8.6%. All of this throws up a number of attractive structural and cyclical investment opportunities.
One of these is Chailease International Finance Corp. (Taipei: 5871), a Taiwan-listed specialised-finance company that lends to consumers and small businesses. A market leader on its home turf, it is now successfully applying its expertise to the underpenetrated mainland Chinese market. Unlike some industries where economies of scale can make or break a company, this is an arena where being a smaller operator is a competitive advantage. This is because many of its customers are just too small for its larger peers to bother with, meaning it can pick a high-quality client base.
Another of our favourites is Ming Yang Smart Energy Group (Shanghai: 601615), a wind-turbine manufacturer. We believe the company will benefit from China’s 2060 carbon-neutral goal and the broader environmental aims set out in the country’s most recent five-year plan. This is a fragmented yet dynamic market that we believe should consolidate over time. It bodes well that Ming Yang is based in one of China’s richest provinces, which has both the intention and the capacity to spend money on more wind-turbine installations. While highly sought-after sectors such as renewables have frothy valuations, this is a well-priced company.
Finally, Wiwynn (Taipei: 6669) remains a core holding for us. It focuses on research and development as well as the distribution of servers for cloud services and hyperscale data centres. Demand for Wiwynn’s services is expected to grow as the world extends its move online and as the likes of Amazon and Facebook continue to build their servers and data centres. This stock has lagged its peers, but we remain impressed with the company’s structural growth potential as demand ramps up.
-
8 of the best houses for sale with librariesThis week: the best houses for sale with libraries – from a five-storey Georgian townhouse in Bloomsbury, London, to a 15th-century property with a library in a medieval tower in Lozère, France
-
Investors pull money from UK equities as government warns of “painful” BudgetThe government’s post-election honeymoon period has been short-lived, and investors are shying away from UK equities as a result
-
Global car shares slide amid lower demand in China – what happens now?Has the car sector run into trouble? Britain’s Aston Martin and Germany’s Volkswagen are among the key automobile brands that have issued profit warnings.
-
Qualcomm could acquire rival Intel – but securing the deal won't be easyA tie-up between Qualcomm and its semiconductor rival Intel would be a coup. But multiple regulatory and commercial hurdles lie ahead.
-
How to invest in the quiet market monthsHere's how to invest in the quiet market months, since “sell in May” hasn’t paid off this year.
-
Spire Healthcare: invest in the booming demand for private healthcareSpire Healthcare is one of the few listed companies benefiting from the growing trend in private healthcare. Should you invest?
-
Are insurance companies a good investment?Costs may be soaring but the insurance sector is currently going through one of its most profitable periods. The market has been slow to realise the opportunity here
-
Google's legal challenges – could it be broken up?Google is fending off legal challenges from both the EU and the US. But would breaking it up actually work?
-
Apple shares slide amid underwhelming demand for new iPhoneApple shares fell last week after disappointing demand for the new iPhone 16 Pro. Can Apple depend on AI to give it a boost?
-
Fast-growing bargain stocks the market has missedA professional investor recommends attractive stocks to invest in. This week: Dan Higgins, portfolio manager, Majedie Investments, highlights three favourites
