Structural Growth Opportunities in Emerging Asia - An update by Fidelity International’s Teera Chanpongsang
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Hong Kong, 22 April 2010 – Structural growth drivers such as favourable demographics, increasing urbanisation, low penetration of consumer goods and the need for infrastructure should lead to long-term investment opportunities in Emerging Asia, according to Teera Chanpongsang, Fidelity International’s Portfolio Manager of the Fidelity Funds - Emerging Asia Fund.
“I strongly believe that Emerging Asia has strong secular economic and earnings growth. Even during economic uncertainty and global financial crisis in 2009, Emerging Asia still grew by an estimated 6.5 per cent compared to negative growth in the developed countries,” he explained. “Looking ahead, according to the International Monetary Fund, Emerging Asia is forecast to grow by more than 8 per cent in the next two years, much higher than the growth in advanced economies.”
“Emerging Asia has strong spending potential due to its high savings rates and low debt levels, and will continue to grow at a brisk pace as its large pool of young population continues to boost the work force and its middle class continues to expand. This should lead to strong domestic consumption growth which in turn should lead to investment opportunities in consumer sectors,” he explained.
Mr. Chanpongsang said infrastructure development remains a priority in Emerging Asia in order to fuel this continuous economic growth.
“Increased private participation in power and road projects in India should drive more investment opportunities,” he said. “In addition, as capital markets in frontier markets develop further and more companies are listed on their stock exchanges, there will be increased investment opportunities.”
Mr. Changpongsang said that whilst country and sector allocations in his fund are a result of stock picks, he is currently overweight in the consumer discretionary sector due to its potential for structural earnings growth.
“I currently prefer the information technology, healthcare, and consumer discretionary sectors as they are likely to benefit most from the long-term growth in Emerging Asia,” he said. “I am a bottom-up stock picker so I prefer companies that have strong earnings growth potential, trade at attractive valuation and have a strong management track record. I also like companies that have strong franchises that are most likely to benefit from structural growth trends.”
With respect to countries, he said: “I focus my investment in the truly emerging markets in Asia like China, India, Indonesia, Thailand, Malaysia and Philippines. I also look for investment opportunities in frontier markets like Pakistan, Vietnam, Bangladesh and Sri Lanka. My investment universe does not include Korea and Taiwan as they already have high per capita incomes and are in a more mature stage of economic development.”
About Fidelity International
Fidelity International is an affiliate but separate company to Fidelity Investments and provides investment products and services to individuals and institutional investors outside of the Americas. Fidelity International has been in Asia for 40 years with offices in Japan, Korea, Australia, Hong Kong, Taiwan, Singapore, China. Fidelity International manages US$211.8billion Assets Under Management (as at 31st December 09), has over 6 million customer holdings and manages 937 funds. Fidelity International has one of the largest proprietary research teams in the world, providing insights into around 90% of the world's stock markets (as measured by the Morgan Stanley Capital International World Index, 31 March 2008).
In Hong Kong, FIL Investment Management (Hong Kong) Limited currently offers more than 80 mutual funds to investors directly and through over 100 distributors, including retail banks and insurance companies. Fidelity in Hong Kong is the largest provider of the ORSO (Occupational Retirement Schemes Ordinance) Member Choice Defined Contribution Scheme and is also one of the top ten MPF (Mandatory Provident Fund) scheme providers in Hong Kong and has been awarded Asia Asset Management’s “Best of the Best Country Awards: Winner award for Hong Kong Best Client Servicing for MPF” in 2004, 2005, 2007 and 2008. In 2010, Fidelity was named “Hong Kong MPF Schemes Provider” by Asian Investors as well as winning “Best Equity Pension Group” and Best Mixed Asset Pension Group” over three years in Lipper Funds Awards.
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