Structural growth opportunities in Emerging Asia - 2011 update by Fidelity International’s Teera Chanpongsang
Hong Kong, 20 July 2011 – Powerful structural growth drivers – namely, favourable demographics, strong consumption growth, increasing urbanisation, and infrastructure development – should continue to underpin long-term secular investment opportunities in Emerging Asia, according to Teera Chanpongsang, Fidelity International’s Portfolio Manager of the Fidelity Funds - Emerging Asia Fund.
As for his Fund, Mr. Chanpongsang explained, “My fund is different from other Asian regional funds because it is focused on truly Emerging Asia – China, India, Indonesia, Thailand, Malaysia and the Philippines – as well as selective opportunities in frontier markets like Pakistan, Vietnam, Bangladesh and Sri Lanka. This excludes the more mature economies of Korea and Taiwan, and the advanced city-states of Hong Kong and Singapore. This is because the truly Emerging Asia is driven by long term structural growth trends – a large young population, growing consumption trends, rising living standards, increasing urbanisation and infrastructure expansion. These structural trends form a solid base for strong corporate earnings growth in Emerging Asia, which ultimately drives stock market performance. These structural growth trends are absent within the more mature economies.”
“As developed markets, particularly Japan and Europe, continue to give cause for concern, Emerging Asia consistently demonstrates robust and resilient growth, with corporate earnings rising 370% from January 2000 to March 2011 , 3.7x faster than the developed economies,” he explained. “Although inflation remains a short-term cause for concern, it has been successfully contained in most Emerging Asia markets, with pressures easing and little impact on top-line growth. Emerging Asia is still expected to grow 8.3% during 2011.”
Mr. Chanpongsang noted that the short-term concerns about China have brought down valuations to attractive levels. In particular, he is focusing on China’s consumer discretionary and internet businesses, where the structural growth factors are driving demand. He also looks to Southeast Asia, for good value in Thailand’s energy and materials companies, as well as the Philippines’ consumer food manufacturers and industrials, and banks in both markets. He holds a long-term positive view on Indonesia, where he looks to banks and the coal-mining industry cluster. In India itself, as well as Malaysia, he remains underweight on valuation concerns, but is selectively overweight in Indian banks, healthcare and software services, and Malaysian materials and discretionary stocks.
“Our picks, and broadly Emerging Asia as a whole, rode out the storms of 2008 and 2009 thanks to the market’s fundamental strengths,” he said. “Furthermore, each fresh upheaval, whether in the emerging economies of the Middle East or the mature markets of Europe, has only confirmed Emerging Asia’s new status. I remain a bottom-up stock picker based on my risk-adjusted return analysis, so I always look for companies that are long term winners having solid earnings growth potential, good quality balance sheet and a consistently capable management.”
“I believe that now is a good time to invest in Emerging Asia for long term investors, as valuations are attractive compared to historical levels. There are still many attractive stock picks across Emerging Asia,” Mr. Chanpongsang concluded.
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About Fidelity International
Fidelity International provides investment products and services to individuals and institutions in the UK, continental Europe, the Middle East and Asia Pacific. Established in 1969, the company has over 5,400 staff in 23 countries and manages or administers client assets US$309.7 billion as at 31 March 2011. Fidelity has over 7 million customer holdings and manages more than 750 equity, fixed income, property and asset allocation funds. Fidelity’s fund managers receive research from one of the largest proprietary research teams, covering 99% of the world’s largest listed companies. Fidelity International is an independent company which is privately owned.
Tel: 852 2629 2800
Tel: 852 2629 2800
 Emerging Asia includes China, India, Indonesia, Thailand, Malaysia and the Philippines
 UBS Investment Research
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