EM Fund Stock Picks & Country Commentaries (March 21, 2023)
EM Fund Stock Picks & Country Commentaries (March 21, 2023)
Emerging market fund stock picks for a range of emerging (including China, India, Brazil, etc) or frontier market countries are in focus this week as we cover more February and Q4 fund updates.
Emerging market fund stock picks for a range of emerging (including China, India, Brazil, etc) or frontier market countries are in focus this week as we cover some more February and older Q4 fund updates or letters. Note how any stock picks from the latter are still relevant when the latest stock charts (included in this post) are also considered.
One Fund has explained how “getting China right” will almost certainly be the single most important factor going forward for the Fund and no doubt for international investors with exposure to the country. Their strategy has long been to identify the next Asian Warren Buffet or Peter Lynch who have on the ground experience investing in China (plus share the same investing philosophy) and to allocate them funds to invest.
Rather than just following the international fund herd into a few large cap stocks, these local fund managers generate original investment ideas involving well-managed smaller and medium-sized Asian or Chinese stocks based on their own extensive research and due diligence. These mid and small cap Asian stocks also tend to be cheap because they are not on the radar of most international investors who often follow the herd into particular large caps.
Another fund talked about the up-and-coming Saudi Arabian stock market. However, higher rates on short-term local bank deposits have (for now) lured local investor money away from investing in Saudi stocks and foreign institutional investments have not yet filled the gap.
Some interesting potential emerging market stock picks for this week include:
A specialty hospital stock pick who also owns a hospital facility in an offshore tax haven. This puts the stock on the radar of funds, fund managers, and wealthy medical tourism patients.
A frontier market telco stock pick who’s shares now appear to be stabilizing after reporting subdued revenue growth in it’s core domestic market.
Another frontier market telco expanding into another African frontier market with enormous growth potential.
A Hong Kong listed stock pick with net cash per share that is significantly higher than it’s share trading price. The stock also has an annual dividend in the high single digits.
Meanwhile, in the wake of the collapse of Silicon Valley Bank and the growing banking crisis in both the United States and Europe, we have a number of emerging or frontier market bank stock picks who are in much better shape to whether any local or global crises:
A Middle East retail bank stock pick who’s retail borrower base consists of public sector and blue-chip corporate employees - meaning non-payment rates are immaterial.
A frontier market bank with a London listing who is successfully navigating yet another currency crisis in it’s home market (albeit foreign listed shares took a currency hit).
Other emerging or frontier market banks who’s shares may have fallen, but are in a position to stabilize and rise given strong fundamentals or financials.
Banks in emerging or frontier markets tend to face a different challenge than western banks. Currency depreciations or devaluations will erode capital buffers while foreign currency-denominated assets will rise relative to the bank’s capital base with the majority of the latter usually denominated in local currency.
Finally, this week’s post mentions some frontier market stocks (some may have shares that are difficult for most foreign investors to obtain though) as more examples of companies with sound finances in poor credit rating “neighbourhoods.” In other words, never overlook well managed and well-financed stocks in often politically or economically troubled countries.
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For a further disclaimer and an explanation of the reasoning behind these posts: DISCLAIMER: EM Fund Stock Picks & Country Commentaries Posts.
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