EM Fund Stock Picks & Country Commentaries (July 25, 2023)
EM Fund Stock Picks & Country Commentaries (July 25, 2023)
A variety of emerging market fund stock picks (from US or int'l fund letters, articles or fund manager interviews) + EM value investing and China stock picking or monitoring strategies.
We have a variety of emerging market fund stock picks (from US or international fund letters, articles, or fund manager podcast interviews) to highlight this week (among other stocks also getting mentions late on in this post) with some quick highlights being:
Several deeply discounted but well capitalized Asian real estate stocks with good exposure to high quality logistics and hospitality properties.
A Taiwanese materials stock that makes a key server material component that dedicated AI serves need 4Xs the amount of - meaning 4Xs the sales for the Company.
Several Indian stocks said to be directly benefiting from the Indian government’s push for digitization along with AI trends.
Two Mexican real estate nearshoring plays.
Two North American based “energy transition” stocks invested in Latin America or other emerging markets
As mentioned before, I am not a huge fan of listening to podcasts as many are longwinded which can waste one’s time. But if I listen to one with a fund manager packed full of interesting emerging market investing tips, I think it’s worth more than just a link and a quick summary in my Monday posts.
In one recent podcast interview, an emerging market value fund manager explained how most emerging market fund managers are chasing growth stocks - creating a supply and demand issue for their shares. A quick reminder of our post from last year about the caveats of chasing only emerging market growth stocks:
Terry Smith's ("the English Warren Buffett") mature growth stock investing style hit some snags when applied to emerging markets as he prepares to liquidate his Fundsmith Emerging Equities Trust plc.
In defense of emerging market growth stock investing though, most investors are not Terry Smith and trying to invest hundreds of millions or billions of dollars.
Nevertheless, this particular emerging market fund manager focuses on value stocks, explained what characteristics to look for, and how you can make still make money even with so-called “value traps” that most investors are otherwise told to completely avoid. He also talked about where his favorite hunting grounds are for value stocks right now.
His thoughts align with another fund in this week’s post that talked about why they like Asian real estate stocks - despite many being in deep value territory. Transactions such as privatizations and spinouts have increased in the sector while work from home trends have not taken off in big (and very safe…) Asian cities to hurt the office market (unlike in places like San Francisco or New York City where safety is increasingly a big concern).
In another podcast interview, a fund manager discussed China in detail and how they pick good quality Chinese companies or rather how they cut a list of 9,000 Chinese stocks down to a more manageable list of about 700 quality stocks.
Surprisingly, he commented that Twitter is a good place to monitor what is going on in China e.g. the COVID protests were being reported on there almost instantaneous despite China having a closed Internet. He also noted that learning Mandarin helps as 99% of listed mainland Chinese stocks only report in Chinese and the western media often get the language nuances wrong (and are usually wrong with their reporting about China in general).
Finally, a fund letter mentioned some North American listed so-called “energy transition” stocks invested in Latin America or other emerging markets - one of which they make the case for not being a “value trap.” However, I have other concerns about these sorts of ESG plays and it seems other investors do too.
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