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.
-
What happens if you can’t pay your tax bill, and what is "Time to Pay"?Millions are due to file their tax return this Friday as the self-assessment deadline closes. Though the nightmare is not over until you pay the taxman what you owe - or face a penalty. But what happens if you can't afford to pay HMRC your tax bill, and what is "Time to Pay"?
-
What does Rachel Reeves’s plan for growth mean for UK investors?Rachel Reeves says she is going “further and faster” to kickstart the UK economy, but investors are unlikely to be persuaded
-
How to find quality and profitability in financial companiesOpinion Julian Cane, manager of the CT UK Capital & Income Trust, picks three financial companies that drive cash flow, dividends and asset value
-
Luxury stocks rally after Richemont sales boom – is there hope for the sector?Cartier owner Richemont’s robust results have boosted sentiment about luxury stocks – but are investors getting carried away?
-
Transformed companies displaying momentum and top-quality growthAlex Savvides, manager of Jupiter UK Dynamic Equity Fund, highlights three companies as he tells us where he'd put his money
-
Should you add Straumann Holding to your portfolio?Straumann Holding is a global leader in the premium dental-care market
-
What’s the outlook for the shipping industry in 2025?All we know for certain about the year ahead is that it will be volatile. But the container shipping sector thrives on choppy waters
-
How to find top-quality companies with sustainable and growing dividendsIan Mortimer, portfolio manager of Guinness Global Equity Income Fund, shares where he would put his money for sustainable and growing dividends
-
Why Wise could be worth a lot more than its share price impliesForeign-exchange transfer service Wise has the potential to become the Amazon of its sector – here's why you should consider buying this stock now
-
Can The Gym Group pump up your portfolio?Gym Group was one of the best UK small-cap stocks in 2024 and will beef up your profits this New Year
