Kames Capital’s Top Five Asian Equity Picks

Kames Capital’s Top Five Asian Equity Picks

1. TSMC

The Taiwanese tech giant, which has been in the fund since it launched over five years ago, is the world’s leading foundry (semiconductor manufacturer). It is exposed to many growth areas, such as artificial intelligence, data storage and crypto currencies so there are some good tail winds to their business. Its technological lead compared to the competition is significant – they produce more semiconductors, with more consistency and at more precise measurements than anyone else is able to, and that’s why they are a core supplier to companies like Apple.

2. Macquarie Group

One of the interesting features of Australian financial Macquarie is how it has changed its business model. We’d never have bought Macquarie as an income stock a decade ago, as it was far too cyclical and it rose and fell at the whims of exogenous factors. Now, the majority of its businesses are more annuity style (for example, they are large players in infrastructure), which gives the company far more stable earnings.

3. PTT

Thai integrated oil conglomerate, PTT, is a more unusual holding for a global income fund. It’s seen as a company with very close links to the government and that can be a double-edged sword, but the discount the market ascribed to that fact was disproportionate, creating a valuation discount we were able to exploit. We like its integrated model, as it is upstream in oil and gas, but it also refines and makes petro-chemicals and markets the products.

4. Anta

With a population of 1.4 billion, no one can doubt the importance of Chinese consumption as a theme, and Anta, the Chinese sportswear company, is one route to reach them. In a country which has been slow to develop credible home brands able to challenge the global giants it’s refreshing to see the success of Anta which is challenging Nike and Adidas and is thriving. Consequently they’ve been able to double their dividend in the past two years.

5. DBS

Singaporean financial DBS is seen as a safe and steady financial within the region – it is well capitalised, has multiple revenue streams, and it returns 50% of its earnings to shareholders. Often investing in Asia is about avoiding the booby traps so although DBS grows its loan book slower than the banks in China, India and SE Asia, we actually see that as a positive.