JPMorgan Sees Asia Tech Stocks Doubling as Virus Alters Online Habits
(Bloomberg) -- JPMorgan Asset Management is betting that some Asian technology shares could double in value in three to five years as the global pandemic makes working and playing online a force of habit.
“We are still finding most of these tech names to be offering 15% and 25% annualized expected return on a five-year view,” said Mark Davids, co-manager of the JPMorgan Asia Growth Fund. The technology “trends that existed prior to the coronavirus have been accelerated,” he added.
Alibaba Group Holding Ltd., Tencent Holdings Ltd., Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co. are some of the fund’s biggest investments, according to its fact sheet. It has also added exposure to JD.com Inc. and Sea Ltd., Davids said.
The bet is that those shares will help JPMorgan’s fund stay ahead of the competition -- it has been one of the top performers over the one-, three- and five-year time frames, according to data compiled by Bloomberg. MSCI Inc.’s broadest measure for technology stocks in Asia has underperformed its U.S. peers for each of those periods.
Davids, a specialist in Asia’s emerging equities, said he also increased exposure to China’s consumer-focused stocks and a regional airport. He has reduced allocation to traditional banks, but still likes some lenders in South Asia and Southeast Asia, as well as insurers in China.
“Banks and insurers that can offer well-designed financial products that are acceptable digitally” will gain market share faster than others, he said.
Still, the Hong Kong-based fund manager said another wave of coronavirus infections and an escalation of trade tensions between the U.S. and China pose risks for Asian equities as a whole. Just last week, President Donald Trump cast doubt on the future of his “phase one” trade deal with China, one of the biggest accomplishments of his term, saying Friday that he’s struggling with Beijing in the wake of the global pandemic.
For Davids, moves to curb the spread of the virus have underscored the importance of cloud for work-for-home situations, online streaming, e-commerce and the use of more memory chips and data centres.
Asian stocks in hardware, internet gaming and e-commerce are “very attractive in the long run,” he said.
©2020 Bloomberg L.P.