Postcards from Asia
Join us on our travels as we meet with companies and explore the Asia-Pacific region, getting a true feel for the places, people and companies we invest in.
Postcard from Singapore: Aberdeen Asia Focus Board Visit
Last week, the Aberdeen Asia Focus Board visited Aberdeen’s new office in Singapore – an office where, as Ian Macdonald, CEO Asia Pacific, noted, around 30% of the world’s physical trade passes by every day. The purpose of the trip was to meet the new Asia Pacific leadership team and connect with many of the 39 analysts and portfolio constructors covering China, Singapore, Taiwan, Korea and India.
Retail Rivalries in Vietnam
On a recent visit to Vietnam, the team explored the evolving retail landscapes in the region. As a former FMCG CEO once put it, “The shelves are the battlefields.” That sentiment rang true throughout the trip. Every market has its own nuances, and Vietnam is no exception - these are best understood by being on the ground. Some of the most interesting sights in this trip were 3 competing pharmacies at one road junction, each having a slightly different business model; a modern supermarket that is opened right in the middle of a popular open-air traditional wet market that they aim to replace; 2 modern supermarkets right beside each other, and each approaching the game differently.
On the ground in India: three growth trends
Sameep Kasbekar from Aberdeen’s Asian Equities team recently visited over 20 companies across India. He spotted three key trends shaping the country’s growth story:
- Spending on experiences – More Indians are choosing to spend on travel, dining, and leisure. Hotel chains like ITC are set to benefit from this growing demand.
- Smaller tech firms thriving – While big IT companies face challenges, smaller tech firms that build software for banks and transport systems are growing fast.
- Exporters gaining ground – Indian companies are benefiting from global supply chain shifts. Firms like Uno Minda (car parts) and Poly Medicure (medical devices) are well placed, helped by rising exports and a push to make more products locally. Companies selected for illustrative purposes only to demonstrate the investment management style described herein and not as an investment recommendation or indication of future performance.
Korea’s K-Wave Economy
A recent research trip to South Korea offered valuable on-the-ground insights into key investment themes.
Domestic consumption remains soft, with traditional retailers under pressure from e-commerce. Many are responding with store upgrades and overseas expansion.
Meanwhile, Korea’s cultural exports - from K-pop to K-beauty, continue to gain global momentum. Whether this is a lasting trend or a cyclical surge remains to be seen, but engagement is strong. In autos, Korean manufacturers are steadily gaining ground on Japanese rivals. While tariffs and Chinese competition pose risks, these appear largely priced in.
In financials, non-life insurers are favoured, while banks and life insurers face structural challenges.
One of our holdings, Hyundai Marine Solutions, reflects our approach. As a recurring revenue business supporting Korean shipyards, it’s well-positioned to benefit from the current upcycle.
Why China still matters
Despite macro headwinds, China remains far from “uninvestible.” For abrdn Asia Focus plc, we shifted from a significant underweight position in China to overweight in 2024—not because the economy turned, but because we found compelling stock ideas that can thrive regardless of the broader backdrop. The “new consumption” theme is a standout. From premium pet food brands seeing “uptrading,” to homegrown names like Popmart, Laopu, and Maogeping challenging global players, Chinese consumers are still spending—just differently. These aren’t signs of downtrading. They reflect a new wave of confident, quality-focused domestic brands. After over a decade investing in China, one thing remains true: this market is complex, dynamic, and always full of opportunity. Companies selected for illustrative purposes only to demonstrate the investment management style described herein and not as an investment recommendation or indication of future performance.
East or west side in Taiwan
Getting out and meeting our companies face-to-face is the part of the job our team enjoys the most. One of the great benefits of investing lower down the market cap, is the level of corporate access we get. There is far less information available on smaller companies, so visiting them on their home turf is key to being successful within this asset class. One of our team just returned from Taiwan and was fascinated to discover just how mountainous the east side of the island is. Over 90% of Taiwan’s population lives on the west side, which is connected by several large motorways and the bullet train. This certainly made things easier when visiting 19 new companies and three current holdings.
What can Korea offer investors?
During our recent trip to Korea, we met with 22 companies, focusing on new investment ideas. Currently, abrdn Asia Focus is underweight in Korea due to limited domestic growth and lower corporate governance standards among small-caps. However, our portfolio companies, mainly exporters with US-dollar linked revenues, have shown resilience despite political upheavals, including the impeachment of the President. Korea continues to offer innovative businesses in technology and advanced manufacturing. We are closely monitoring the corporate 'value-up' programme, which aims to enhance shareholder returns and better align promoter incentives with those of minority investors.
Exploring Taiwan's Investment Potential
Following a recent trip to Taiwan, Gabriel Sacks, Lead Manager of abrdn Asia Focus plc, reflected on the exciting opportunities it offers. From tech giants to innovative consumer goods companies and emerging renewable energy plays, the market is ripe with potential. Our on-the-ground research and direct engagement with these companies provide us with a deeper understanding of their operations and growth prospects. Following Gabriel's trip, Taiwan continues to be an important market for abrdn Asia Focus plc as we look to uncover hidden gems in the region.
India: Past and Present
Twenty years ago, Aberdeen Investment Director, Kristy Fong began her journey with India. She shares, “From the bustling Bandra Kurla complex to the dynamic entrepreneurial spirit, India continues to amaze. Digitalisation, tech, and AI are creating new opportunities in various sectors.” Investment Analyst Jeremiah Silva recently joined Kristy on his first trip to India, describing it as “eye-opening.” He notes, “The contrast between Delhi and Mumbai was striking. Digitalisation and smartphone use are rapidly growing post-Covid. Conversations with locals highlighted both economic disparities and resilience.”
Ever heard of a ‘nutraceutical’?
We currently hold two Thai companies: Humanica, a software company added to our portfolio earlier this year, and Mega Lifesciences, a branded generics and nutraceutical business. A nutraceutical is a product derived from food sources that provides both nutritional and medicinal benefits, combining aspects of nutrition and pharmaceuticals to support health and prevent chronic diseases. Despite the challenges Thailand has faced in recovering from COVID-19 and navigating a turbulent political landscape, our colleagues based on the ground in Asia continue to visit Bangkok regularly, monitoring our existing holdings and seeking to uncover new investment opportunities.
Holiday turned market analysis
One of our investment writers from the Singapore office recently visited Japan on holiday. Little did she know she would soon be writing about one of the worst days in Japanese equities history, triggered by a paradigm shift in the Central Bank’s monetary policy. Although Japan is not part of our investible universe for abrdn Asia Focus plc, our Tokyo office provides valuable insights. The sell-off in Japan significantly impacted investment strategies and equity markets in North Asia, especially South Korea and Taiwan. Having colleagues on the ground across the region helps us understand these dynamics as they unfold.
In good times and bad
Our team recently navigated turbulent weather and markets to visit companies and uncover long-term opportunities in Taiwan. An interruption by super typhoon Gaemi, was a good excuse to enjoy a traditional hotpot team dinner. After two days of meetings moved to Zoom due to the typhoon, the team were excited to be able to move on to Taizhong and Tainan to resume face-to-face meetings with companies.
South Korea’s remarkable transformation
Since the Korean War, South Korea has transformed from a predominantly agricultural economy to an industrial powerhouse. Initially relying on a labour advantage to produce goods cheaply, South Korea has since leveraged education and infrastructure to upgrade its capabilities - a familiar playbook seen across Asia. During a recent trip, our investment team spoke with 25 companies from a range of sectors, all aiming for sustainable earnings growth. Our key takeaway? Exciting times ahead with many new angles emerging from our discussions!
120m motorcycle drivers in Indonesia
Recently, our Asia-based team members spent time in Cikarang, an industrial area in West Java, observing operations at an automotive manufacturer creating parts for both motorcycles and cars. At abrdn Asia Focus plc we believe small caps is a great way to access the Indonesian growth story, especially given the main index’s heavy tilt towards sectors like finance. Presently, close to 10% of our portfolio is allocated to Indonesia, diversified across consumer goods, healthcare, energy and financial sectors.
Positive outlook amidst India's elections
In the lead-up to India’s Parliamentary elections, our team, including Devan Kaloo and Rita Tahilramani, met with over 25 companies, affirming India’s strong growth prospects. Although the election results were unexpected for some, we view them as positive, enhancing policy stability and power balance in this major democracy. High-quality businesses in India make up about 25% of our abrdn Asia Focus portfolio, reflecting the nation’s dynamic economy.
The Beijing Auto Show 2024
Our investment team recently attended the Beijing Auto Show, delving into the electric vehicle sector’s dynamic and competitive landscape. With this industry undergoing rapid changes and expected consolidation, the expertise of management teams becomes indispensable for companies striving to adapt and thrive. abrdn Asia Focus plc is seeking to capitalise on the burgeoning electric vehicle manufacturing market by holding a stake in Zhejiang Shuanghuan Driveline, the leading electric vehicle gear and shaft manufacturer in China.
Computex 2024, Taipei
Taiwan is a key player in the global tech supply-chain, driving the AI revolution. At the recent Computex conference in Taipei, our team met with existing and prospective companies, benefiting from the vibrant tech ecosystem. At abrdn Asia Focus plc, we are bullish on IT companies in the Asia Pacific region. Over 23% of our portfolio was invested in this sector as of 12 June 2024, with around 15% allocated to semiconductors and hardware equipment businesses.