If you’re looking to invest in Asia, then small-cap value stocks in Asia look favourable.
According to Fidelity’s Bajaj, three key characteristics to look for are: the company should have a good product that customers want and are ready to pay for, so that the business can make a high return on capital (a key gauge of profitability); second, it should be managed by honest and competent people; and third, it should be available at a good price, which means it should offer enough of a margin of safety to take into account accidents, adverse events and mistakes.
“Most of Fidelity Asian Values’ capital is deployed in small-cap value stocks in Asia. Despite recent outperformance, small-cap value stocks are trading at a significant discount to growth stocks – even greater than the gap seen around the turn of the millennium,” says Bajaj.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Here are three best value Asian stocks worth a look.
RFM Corporation (Manila: RFM)
RFM Corporation has a solid ice-cream franchise in the Philippines thanks to a 50-50 joint venture with Wall’s (a Unilever brand). The group’s brands, Selecta and Wall’s, have a market share of more than 70% in a sector that is expanding at a low double-digit annual rate as ice cream becomes increasingly popular, according to Fidelity.
“It is difficult for potential rivals to gain a foothold in the market because the company gives its cabinet freezers to mom-and-pop stores for free in exchange for a prime spot on the shelf for its ice creams. These stores don’t have space for a second cabinet freezer and tend to choose to sell RFM’s brands because of their popularity among consumers,” says Bajaj.
Uni-Charm Indonesia (Jakarta: UCID)
Uni-Charm Indonesia is a subsidiary of Japan’s Uni-Charm. It is the country’s largest producer of nappies and sanitary towels. Market penetration remains low. “The strong reputation of the brands constitutes an enduring competitive advantage, helping to ensure these markets remain oligopolies. As a result, the company enjoys stable growth and high returns on invested capital. Uni-Charm Indonesia has a clean balance sheet,” Bajaj adds.
Teejay Lanka (Colombo: TJL)
Teejay Lanka, Sri Lanka’s largest fabric mill, is a textile manufacturer benefiting from supply chains diversifying out of China. Owned by Brandix and Pacific Textile, it operates fabric mills in India and Sri Lanka, and sells to brands such as Nike, Uniqlo, Tommy Hilfiger and Calvin Klein.
“The management has a strong record in growing consistently, profitably and with prudent capital allocation,” Bajaj says.
Kalpana is an award-winning journalist with extensive experience in financial journalism. She is also the author of Invest Now: The Simple Guide to Boosting Your Finances (Heligo) and children's money book Get to Know Money (DK Books).
Her work includes writing for a number of media outlets, from national papers, magazines to books.
She has written for national papers and well-known women’s lifestyle and luxury titles. She was finance editor for Cosmopolitan, Good Housekeeping, Red and Prima.
She started her career at the Financial Times group, covering pensions and investments.
As a money expert, Kalpana is a regular guest on TV and radio – appearances include BBC One’s Morning Live, ITV’s Eat Well, Save Well, Sky News and more. She was also the resident money expert for the BBC Money 101 podcast .
Kalpana writes a monthly money column for Ideal Home and a weekly one for Woman magazine, alongside a monthly 'Ask Kalpana' column for Woman magazine.
Kalpana also often speaks at events. She is passionate about helping people be better with their money; her particular passion is to educate more people about getting started with investing the right way and promoting financial education.
OpenAI – corporate drama unleashed
OpenAI, the firm behind ChatGPT, was in uproar as its boss was booted out, briefly snapped up by Microsoft and then brought back again.
By Dr Matthew Partridge Published
Can Lidiane Jones be Bumble's perfect match?
Dating app Bumble is taking on Lidiane Jones, a well-regarded leader in tech, as its new boss. Can she work her magic in a new arena?
By Jane Lewis Published
Halifax: House price slump continues as prices slide for the sixth consecutive month
UK house prices fell again in September as buyers returned, but the slowdown was not as fast as anticipated, latest Halifax data shows. Where are house prices falling the most?
By Kalpana Fitzpatrick Published
Rents hit a record high - but is the opportunity for buy-to-let investors still strong?
UK rent prices have hit a record high with the average hitting over £1,200 a month says Rightmove. Are there still opportunities in buy-to-let?
By Marc Shoffman Published
Pension savers turn to gold investments
Investors are racing to buy gold to protect their pensions from a stock market correction and high inflation, experts say
By Ruth Emery Published
Where to find the best returns from student accommodation
Student accommodation can be a lucrative investment if you know where to look.
By Marc Shoffman Published
Best investing apps
We round up the best investing apps. Looking for an easy-to-use app to help you start investing, keep track of your portfolio or make trades on the go?
By Ruth Emery Last updated
The top funds to invest in - November 2023
Tips Investors are focused on income strategies and FTSE heavyweights. We look at what investors have been adding to their portfolios in the last month
By Vaishali Varu Last updated
The world’s best bargain stocks
Searching for bargain stocks with Alec Cutler of the Orbis Global Balanced Fund, who tells Andrew Van Sickle which sectors are being overlooked.
By Andrew Van Sickle Published
Revealed: the cheapest cities to own a home in Britain
New research reveals the cheapest cities to own a home, taking account of mortgage payments, utility bills and council tax
By Ruth Emery Published