Portfolio manager Nitin Bajaj reviews the fundamental backdrop facing investors in Asia’s key economies. He discusses how extreme market dislocations are creating buying opportunities among small-cap value companies, particularly in China, and highlights how this translates into the current positioning of Fidelity Asian Values PLC.
One of the major features of the investment landscape across Asia since the start of 2020 has been the material outperformance of small-caps relative to large-caps. This looks like a partial mean reversion from what happened between 2016 and 2019 when large-cap stocks significantly outperformed small-cap stocks.
However, scratch a little deeper and a large discrepancy can be seen within Asia’s smaller companies, where there has been an outsized outperformance of small-cap growth versus small-cap value. Small-cap growth stocks are now trading at a premium of over 100% to small-cap value stocks – a level we last saw in 1999-2000.
Fidelity Asian Values Plc (LON:FAS) provides shareholders with a differentiated equity exposure to Asian Markets. Asia is the world’s fastest-growing economic region and the trust looks to capitalise on this by finding good businesses, run by good people and buying them at a good price.