Fidelity Asian Values: India – adding spice to the mix

India accounts for 23% of Fidelity Asian Values plc (LONFAS) portfolio and the top two overweight positions, both of which are Financials. In this note, we examine some of the key macro attractions of the that market, which help generate favourable tailwinds for investment. These include economic growth, socio-demographic changes, digitalisation and deregulation. We also use the two overweight, very different Indian case studies, to illustrate FAV’s investment approach and how it adds value in the process. In six months, the Trust’s NAV has risen to our previous July 2023 year-end estimate. We have now increased our forecast by 8%, reflecting performance to date, stock selection and the regional outlook.

  • Asia’s appeal: The IMF’s January World Economic Outlook update once again highlighted the superior economic prospects (and lower downside revisions) seen in FAV’s investment mandate. We also see opportunities being created by new trade agreements, reduced regulation, long-term socio-demographic trends and urbanisation.
  • Trust-specific appeal: FAV uses in-depth research to identify good businesses at fair prices, rather than making macro calls. Despite headwinds for many years, when market appetite was for large-cap, growth companies, FAV outperformed. More recently, market appetite has turned sharply in FAV’s favour.
  • Valuation: FAV is trading at a 6% discount to NAV – broadly in line with its peers in the AIC Asia Pacific Smaller Companies Index (average discount 10%) and the broader Asia Pacific sector (average 7%), even though its one-year performance has been ca.18% better than that of the latter. Most assets are listed, making the NAV “real”.
  • Risks: Geopolitical and economic tensions may affect investments, and also sentiment. If growth/momentum stocks are in favour (as they have been for much of the period since 2016), FAV faces a relative headwind, which it has usually, but not always, overcome. Volatility of returns is likely to be high.
  • Investment summary: FAV has delivered superior long-term returns by being in attractive growth markets and adding incremental value using structured, in-depth analysis to identify mis-priced investments. Its “value” investments have actually delivered higher earnings growth than an average Asian “growth” company, as well as being lower-rated and providing a higher RoE. FAV is actively managed, and divergence from the benchmark performance, often for sustained periods, is to be expected.

Click to view all articles for the EPIC:
Or click to view the full company profile:
Share on facebook
Share on twitter
Share on linkedin
Hardman & Co

More articles like this

Fidelity Asian Values

Asian stocks to rise after US shrugs off Powell

Stocks and bonds retreated as traders pause after November’s blockbluster rally and debate the case for interest rate cuts. Bitcoin surged past $41,000, while gold briefly touched an all time high. The 10-year Treasury yield added four basis

Fidelity Asian Values

Asia stocks close strongest month since January

Asian stocks rose on Thursday to clock their strongest performance in 10 months, as investor sentiment warmed on a relatively benign global interest rates outlook and signs of economic recovery. Europe and Wall Street are also set to

Fidelity Asian Values

Asian stocks hit one-week highs as US dollar sinks

According to Yahoo News, Asian stocks briefly hit one-week highs on Wednesday, while bonds rose and the US dollar sank on fresh signs of possible US interest rate cuts. The New Zealand dollar jumped after its central bank

Fidelity Asian Values

The Asia opportunity – looking for smarter growth

Asia has been on a remarkable journey in the past few decades. The most notable aspect has been the emergence of China. Thirty years ago, there were just a handful of listed companies in China; now it is

Fidelity Asian Values

Asia markets strengthen ahead of Biden-Xi talks

Asia-Pacific markets rose on Tuesday as investors look ahead to highly anticipated talks between the U.S. and China as well as more economic data. U.S. President Joe Biden and China’s President Xi Jinping’s will meet in-person in San Francisco

Fidelity Asian Values

Asian stocks surge as Fed rate hike bets recede

Most Asian stocks rose sharply on Monday as weaker-than-expected U.S. payrolls data furthered expectations that the Federal Reserve was done with its rate hike cycle, while focus also turned to upcoming economic readings from China.  Regional stocks have

Fidelity Asian Values

Asian stocks rally tracking Wall St strength

Most Asian stocks rose sharply on Friday, encouraged by strength on Wall Street and increased bets that the Federal Reserve was done with its run of interest rate hikes, although focus still remained on key U.S. payrolls data

Fidelity Asian Values

Asian stocks rise ahead of Fed decision

Asian stocks edged higher on Wednesday ahead of a keenly awaited policy decision from the Federal Reserve later in the day, while the yen was stuck near one-year lows against the dollar as Tokyo ramped up intervention warnings.

Fidelity Asian Values

Asian shares mostly rise

Shares mostly rose Tuesday in Asia after Wall Street wobbled to a mixed close as yields on U.S. Treasury bonds fell back after creeping above 5%. Benchmarks rose in Tokyo, Sydney, Seoul, Shanghai and Taiwan, but fell in

Fidelity International

Fidelity Asian Values 12.8% NAV annual growth outperforms index

Fidelity Asian Values plc (LON:FAS) has announced its monthly summary for September 2023. Portfolio Manager Commentary The Trust’s NAV rose 12.8% during the 12-month period ended 30 September 2023, outperforming its reference index which rose by 11.2%. The

Fidelity Asian Values

Stocks rise with earnings in focus

Stocks edged higher and bond prices slid on Tuesday as markets continued to retrace last week’s moves to safe-haven assets, focusing on corporate earnings prospects and the resilience of the U.S. economy rather than tensions in the Middle

Fidelity International

Fidelity Asian Values Annual Report 2023 (LON:FAS)

Fidelity Asian Values plc (LON:FAS) has announced its final results for the year ended 31 July 2023. Financial Highlights: CHAIRMAN’S STATEMENT This is my last Annual Report for the Company, having served as your Chairman for nine years

Fidelity Asian Values

Asian stocks rally amid dovish Fed signals

Asian stock markets experienced a surge on Wednesday, while the dollar took a step back as traders adjusted their U.S. interest rate expectations following a dovish shift from Federal Reserve officials. However, all eyes remain on the U.S.

Fidelity Asian Values

South Asia to grow by nearly 6% this year

South Asia is expected to grow by 5.8 percent this year, making it the fastest-growing region in the world even as the pace remains below pre-pandemic levels, the World Bank said on Tuesday. The latest South Asia Development

Fidelity Asian Values

Asia-Pacific economies to still see growth this year

Amid a backdrop of weaker global trade and higher interest rates, economies across the Asia-Pacific region are poised for resilient growth in 2023, although weaker than in 2022. In its latest Asia Pacific’s economic outlook update, S&P Global

Fidelity Asian Values

How high speed rail is transforming Asia’s economic potential

It was the inauguration of the Shinkansen “bullet train” in the 1960s that arguably kicked off the high-speed rail revolution, representing a triumphant economic achievement for Japan that helped it return to the international fold following the turbulence

No more posts to show