Forget tencent risks: Asian technology is still a buy, these funds say

Photographer: Qilai Shen / Bloomberg

Friday’s attack by President Donald Trump on WeChat may have prompted many investors to drop their shares of Asian technology. But for some, the selloff has presented a good buying opportunity.

Jian Shi Cortesi, a portfolio manager at GAM Investment Management in Zurich, on Friday bought some Chinese internet stocks and plans to further increase holdings as stock prices pull back more.

“The U.S. ban on Chinese Internet companies will have little effect on the revenue and revenue of most listed Chinese Internet companies,” Cortesi said in an interview. Har Asia Focus Equity Fund has a third of its exposure in internet campaigns, beating 93% of its peers in the past year. “It makes sentiment hurtful, which could push stock prices lower and give them a chance to buy.”

Trump’s escalation of his confrontation with Beijing, by banning US residents from doing business with the TikTok and WeChat apps, wiped out more than $ 60 billion from Asia’s four largest technology companies and highlighted the political risks t have regional companies, especially those in China.

But Asian tech balls are not flying.

“President Trump’s noise offers a buying opportunity,” said Gary Dugan, chief executive officer of the Global CIO Office in Singapore. “Ratings are low on international comparison and many are extremely competitive worldwide.”

The value of the four largest stocks on the MSCI Asia Pacific Index, all tech companies, still outperforms their American peers. The group – Alibaba Group Holding, Tencent Holdings Ltd., Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co. – trade on average 25 times the gross profit for the next year, against the 34 times of the more well-known tech giants at the top of the S&P 500 index.

The rating gap has narrowed since June, when companies in Asia have been the cheapest since 2015. Oliver Cox, JPMorgan Asset Management, which manages the JPMorgan Pacific Technology Fund, says the tiff US-China does not change the long-term story . He believes that Asia has repeated many of the American trends at an earlier stage of evolution.

That means “a much faster growth rate, more promising prospects and thus a greater upside potential for technical stocks in Asia-Pacific compared to the more mature, slower-growing U.S. names,” he said. The four Asian tech titans won an average of 25% this year, behind an average gain of 39% in their US peers.

“The gap could be closer,” said Pruksa Iamthongthong, senior investment director for Asian equities at Aberdeen Standard Investments, about the valuation difference. “Over a three-year period, we will see a clear path on how they want to monetize companies that they invested in a long time ago.”

Alibaba, Tencent Holds Its Leadship as New IT Almost Fintech Shift

Yet U.S. capital markets remain by far the deepest, most diverse and most attractive in the world, said Andy Wong, senior multi-manager for investments in Pictet Asset Management, adding American leadership in equity, corporate governance, liquidity and innovation guarantee a higher multiple.

However, a weakening of the US dollar may also require foreign investors to look at foreign assets, and Asian tech presents good opportunities given structural growth drivers, according to Suresh Tantia, a senior investment strategist at Credit Suisse Group AG.