Undiscovered global leaders in Asia Emily Whiting , Investment - - PowerPoint PPT Presentation

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Dec 16, 2022 173 likes •417 views

Undiscovered global leaders in Asia Emily Whiting , Investment Specialist, EMAP Equities PROFESSIONAL CLIENTS ONLY | NOT FOR RETAIL USE OR DISTRIBUTION Not your fathers Emerging Markets What is behind Trumps protectionist agenda in

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Undiscovered global leaders in Asia

Emily Whiting, Investment Specialist, EMAP Equities

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Not your father’s Emerging Markets

What is behind Trump’s protectionist agenda in emerging markets

1. Low cost wages in Mexico
2. Made in China 2025
3. Currency manipulation
4. Bad trade deals

Image source: Shutterstock

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1% in MSCI Emerging Markets Index is misleading …

Source: MSCI Consultation on China A-Shares Potential Inclusion, June 2017. Citi Research. *Based on free float market-cap of 234 A-share stocks to be included, and a 30% upper limit of foreign ownership. EM = Emerging Markets

First inclusion step: May 2018 Second inclusion step: Aug 2018 (5% inclusion factor for 234 A-shares) By 2025* (10\0% inclusion factor for 234 A-shares) China A-share inclusion in the MSCI EM Index

China 29.5 China A 0.7

China Weight 30.2%

China 25.6 China A 13.7

… China A-shares will drive Emerging Markets in the future

China Weight 39.3%

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China A-shares: large, liquid, inefficient and lowly correlated

Source: J.P. Morgan Asset Management, Bloomberg. Data as of as of 31 December 2017

3,467

A-shares

USD67bn

Daily Traded Value In 2017

0.19

*Correlation to MSCI Europe

2.1%

Foreign ownership

Source: Bloomberg. *Correlations of Weekly Returns in USD (31 March 2008 to 30 March 2018) Indices do not include fees or operating expenses and are not available for actual investment.

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You’re probably already thinking about …

Source: Bloomberg, Company Accounts, J.P. Morgan Asset Management. Data as of 31 December 2017. The companies above are shown for illustrative purposes only. Their inclusion should not be interpreted as a recommendation to buy or sell. The use of their logos is in no way an endorsement of those companies by J.P. Morgan Asset Management nor is it intended to indicate an endorsement of J.P. Morgan Asset Management by those companies.

Market cap

Beverages

USD 90bn USD 146bn

Diageo Kweichou Moutai

Dairy products

USD 57bn USD 32bn

Danone Inner Mongolia Yili

Home appliances

USD 12bn USD 60bn

Whirlpool Midea Group

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… but the opportunities lie in the next wave

Image source: Shutterstock

Healthcare Technology Consumption Upgrade

Consumption upgrade

n Leisure, travel & entertainment

Healthcare

n Chinese healthcare

Technology

n Artificial intelligence and voice

recognition

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iflytek: a leading voice recognition and artificial intelligence solution provider

Technology Image source: Shutterstock, The companies above are shown for illustrative purposes only. Their inclusion should not be interpreted as a recommendation to buy or sell.

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The rise of Generation - Z

In 2014, Gen Z’ers consumed 35% of online video, by 2020, what % will they consume?

48%

67%

82%

Source: iResearch, Bank of America Merrill Lynch (BofAML) Equity Research. Data as of May 2018. Image source: Shutterstock. Consumption Upgrade

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46 35 56 22 62 67 66 46 10 20 30 40 50 60 70 80 Online entertainment Online video Mobile games Live broadcasting 2014 2020E

Increasing spending power of Gen-Z in China’s online entertainment market

Source: iResearch, BofAML Equity Research. Data as of end May 2018

Generation Z’s market share contribution (%)

Consumption Upgrade

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AfreecaTV: riding the e-sports wave

Consumption Upgrade Image source: Shutterstock, The companies above are shown for illustrative purposes only. Their inclusion should not be interpreted as a recommendation to buy or sell.

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Huazhu Group: will this be the world’s biggest hotel company?

Consumption Upgrade Image source: Shutterstock, The companies above are shown for illustrative purposes only. Their inclusion should not be interpreted as a recommendation to buy or sell.

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Shenzhou: opportunities exist outside the ‘new economy’

Consumption Upgrade Image source: Shutterstoc. The companies above are shown for illustrative purposes only. Their inclusion should not be interpreted as a recommendation to buy or sell. k

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Wuxi Bio: following the molecule to become a global leader

Healthcare Image source: Shutterstock. The companies above are shown for illustrative purposes only. Their inclusion should not be interpreted as a recommendation to buy or sell.

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Finding global leaders before they list

How many start-ups have reached unicorn status in China since 2013?

127

Source:. Unicorns Abroad: The creation of billion-dollar start-ups is shifting out of the US, October 2017; Image source: Shutterstock

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Finding global leaders before they list

How many start-ups have reached unicorn status in China since 2013?

127

Source: Unicorns Abroad: The creation of billion-dollar start-ups is shifting out of the US, October 2017. Image source: Shutterstock

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Who are these unicorns?

Source: Unicorns Abroad: The Creation Of Billion-Dollar Startups Is Shifting Out Of The US (link) October 2017. Image source: Shutterstock. The companies above are shown for illustrative purposes only. Their inclusion should not be interpreted as a recommendation to buy or sell.

Top 10 Unicorns, February 2018

Company Latest Valuation Ant Financial $150 billion Apr-18 Uber $68 billion Jun-16 Didi Chuxing $56 billion Dec-17 Airbnb $31 billion Mar-17 Meituan-Dianping $30 billion Oct-17 Company Latest Valuation SpaceX $21 billion Jul-17 WeWork $20 billion Jul-17 Palantir $20 billion Oct-15 Spotify $19 billion Dec-17 Lufax $18 billion Jan-16

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FinTech unicorns

Insert Chris Birney video

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Where are all the unicorns in India?

Sources: Company data, Economic Times. VC Circle. Inc42.com. Crunchbase. Company data. Morgan Stanley Research. The companies above are shown for illustrative purposes only. Their inclusion should not be interpreted as a recommendation to buy or sell. The use of their logos is in no way an endorsement of those companies by J.P. Morgan Asset Management nor is it intended to indicate an endorsement of J.P. Morgan Asset Management by those companies.

Key players along with key investors

n Walmart n Microsoft n Tiger Global n Tencent n SoftBank n Alibaba n SAIF Partners n SoftBank n Tencent

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Deep fundamental research is key to unearthing new opportunities

Source: J.P. Morgan Asset Management as of 31 August 2018. *as of 30th June 2018

97

investment professionals

21

languages

8

locations

$150m

*research budget across equities

17

analysts covering China A shares

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51Job:

Insert Dong video

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PM PM team based in Asia

Ma Mark Da Davids ds Jo Joanna Kwo wok

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In summary…

n The investment universe is rapidly evolving n You need to think forward and be ahead of the curve… n …to do that you need deep fundamental research

SLIDE 23 22 | PROFESSIONAL CLIENTS ONLY | NOT FOR RETAIL USE OR DISTRIBUTION FOR PROFESSIONAL CLIENTS/ QUALIFIED INVESTORS ONLY – NOT FOR RETAIL USE OR DISTRIBUTION. This is a marketing communication and as such the views contained herein are not to be taken as an advice or recommendation to buy or sell any investment or interest thereto. Reliance upon information in this material is at the sole discretion of the reader. Any research in this document has been obtained and may have been acted upon by J.P. Morgan Asset Management for its own

purpose. The results of such research are being made available as additional information and do not necessarily reflect the views of J.P. Morgan Asset Management. Any forecasts, figures, opinions,

statements of financial market trends or investment techniques and strategies expressed are, unless otherwise stated, J.P. Morgan Asset Management’s own at the date of this document. They are considered to be reliable at the time of writing, may not necessarily be all inclusive and are not guaranteed as to accuracy. They may be subject to change without reference or notification to you. It should be noted that the value of investments and the income from them may fluctuate in accordance with market conditions and investors may not get back the full amount invested. Past performance and yield are not a reliable indicator of current and future results. There is no guarantee that any forecast made will come to pass. J.P. Morgan Asset Management is the brand name for the asset management business of JPMorgan Chase & Co. and its affiliates worldwide. To the extent permitted by applicable law, we may record telephone calls and monitor electronic communications to comply with our legal and regulatory obligations and internal policies. Personal data will be collected, stored and processed by J.P. Morgan Asset Management in accordance with our EMEA Privacy Policy www.jpmorgan.com/emea-privacy-policy. This communication is issued in Europe (excluding UK) by JPMorgan Asset Management (Europe) S.à r.l., 6 route de Trèves, L-2633 Senningerberg, Grand Duchy of Luxembourg, R.C.S. Luxembourg B27900, corporate capital EUR 10.000.000. This communication is issued in the UK by JPMorgan Asset Management (UK) Limited, which is authorised and regulated by the Financial Conduct Authority. Registered in England No. 01161446. Registered address: 25 Bank Street, Canary Wharf, London E14 5JP. 0903c02a82388e6c