Emerging Asia: Thailand, Taiwan and taper

December 28, 2013 Leave a comment

December 26, 2013 2:34 pm

Emerging Asia: Thailand, Taiwan and taper

A tale of diverging markets shows shift in investors’ Asia thinking

Exports, or a nascent middle class? One is the age-old path to prosperity in Asia; the other has produced stunning returns in the past five years. But a look at the diverging performances of Taiwan and Thailand – exponents of the former and latter approaches respectively – suggests a return to the former is under way.It is not always easy to say which came first: the money, or the investing theme. Cheap US funds in search of higher returns certainly found an easy home in southeast Asia, notably Thailand, where the credit the dollars provided lifted growth and helped fuel aconsumer boom (and worrying levels of household debt). Backing Thailand’s benchmark SET index five years ago has produced a total return of about 270 per cent. Over that same time, Taiwan’s TWSE has offered just a quarter of that. Yet emerging Asia gets about two-fifths of its economic growth from exports – a higher proportion than emerging Europe (a third) or Latin America (a fifth). And since the Federal Reserve introduced the concept of tapering in May, Taiwan and its export rival South Korea are up almost a tenth respectively while Bangkok and Jakarta, another easy money success story, are off as much as 7 per cent.

Betting on north Asia’s exporters over consumers in the southeast suggests strong investor faith in the Fed’s ability to smoothly withdraw its cheap money without stunting a pick-up in the global economy. Generally, economic growth of about 7 per cent in Asia implies earnings will rise about a tenth in the next year, according to Nomura, which expects the region to grow 7.2 per cent. Thailand and Indonesia would of course also benefit from this. But there is only room for so many successful strategies. The shift in the past few months suggests markets have moved on to the next chapter in the Asian story.

Filed under Macro Trends

Unknown's avatarAbout bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

Leave a comment