Best Asian opportunities lie in large caps
Large-cap Asian stocks like Ping An Insurance and Tencent Holdings are providing investors with the best opportunities and will continue to do so over the next six months, according to JP Morgan’s Asia Growth portfolio manager, Joanna Kwok.
Kwok said large caps have primarily driven earnings over the last few years and would probably continue to do so in the near future, with small caps potentially providing some value in the coming year.
The top five contributors to the Asia Growth Fund’s performance this year were large-cap stocks Shenzhou International Group Holdings, BOC Aviation Ltd, Taiwan Semiconductor Manufacturing, AIA Group and Tata Consultancy Services.
Household names like Tencent, Alibaba and Samsung Electronics are found in the top ten holdings of the fund, so it’s clear Kwok’s preference for large caps shines through in the portfolio.
Compared to the MSCI AC Asia ex Japan benchmark, the fund is overweight 9.5 per cent in financials and 3.3 per cent information technology and has an interesting 4.9 per cent overweight in India and 4.4 per cent overweight in Indonesia.
The chart below tracks the performance of the MSCI AC Asia ex Japan index for the year to date.
Looking forward, Kwok says growth in Asia is slowing and currencies are under pressure as the US dollar rises and protectionism increases.
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