Unearthing Asia’s buried treasures
Gabriel Sacks, Co-Manager of abrdn Asia Focus, highlights how under-researched smaller companies in Asia can offer strong long-term potential – if investors are willing to dig deeper and go beyond the data.
Duration: 5 Mins
Date: 09 Oct 2025
Hitchcock coined this term to describe a plot device that matters an enormous amount to a movie’s characters but relatively little to the audience. The Hidden Fortress’s MacGuffin takes the form of 200 pieces of gold concealed in hollowed-out sticks.
What a wonderful metaphor for the brightest of Asia’s smaller companies. Like the camouflaged cache that spurs the adventures of Kurosawa’s heroes, these businesses can be a source of significant reward but can also be far from easy to uncover.
As far as investors are concerned, of course, such opportunities are anything but mere MacGuffins. They can represent an important and attractive means of diversifying portfolios in terms of region, sector, industry, market capitalisation and other factors.
So how are they found? At least on the face of it, the answer is straightforward enough. Like Tahei and Matashichi, The Hidden Fortress’s principal protagonists, you just have to keep digging.
The value of an on-the-ground approach
The first problem investors may encounter when they set out to explore Asia’s smaller companies is that these businesses are frequently under-researched. The extent of coverage in emerging markets (EMs) is particularly meagre.
Much of the blame lies with the members of the investment analyst community, the vast majority of whom concentrate their gaze elsewhere. While hundreds might “eyeball” a US technology titan, barely a handful – if any at all – are likely to pay heed to, say, a family-owned food firm in the Philippines.
You may think I chose that example purely for the purposes of attention-grabbing alliteration. Not so! Precisely such a company, Century Pacific, is a key holding in abrdn Asia Focus plc, the fund I co-manage.
Having studied at leading American universities, many of Century Pacific’s executives have a conspicuously entrepreneurial outlook and a fierce commitment to sustainability and good governance. These attributes have helped the business see off numerous would-be rivals, including several multinationals, and preserve its domestic dominance.
How did we get to know about this story? Our own specialist investment team draws on on-the-ground expertise, first-hand knowledge and direct engagement with companies – which is to say we strongly believe in the merits of “being there”.
Beyond the quantitative
It is tempting to assume all the information needed for robust investment decisions lies in the superabundance of data that businesses are nowadays required to disclose. It is also tempting to assume era-defining advances such as artificial intelligence (AI) are rendering the task of making sense of that superabundance ever simpler.
There is more than a germ of truth in both assumptions. Transparency levels are unprecedented, and AI is eminently capable of carrying out the “heavy lifting” that number-crunching and many other types of analysis entail.
Yet quantitative analysis is by no means guaranteed to tell us everything we ought to know. A business’s qualitative aspects can be every bit as influential – and maybe even more so – in guiding our choices.
This is why we prefer to see things for ourselves. It is why we visit premises and facilities. It is why we meet with senior executives. It is why we enter into dialogue and ask probing questions about issues such as cashflow, adaptability and strategic vision.
This kind of additional insight can make all the difference in determining whether we feel a company will satisfy our expectations in the long run. We regard it as vital to our efforts to identify opportunities that most investors routinely overlook or never even get to hear about.
Hiding in plain sight
In Asia, as in other regions, smaller companies have tended to outperform their larger counterparts over time. This is normally because of their capacity for growth, their willingness to innovate and their ability to respond to or even drive market disruption.
Today, in the face of continued geopolitical and geo-economic uncertainty, many have another potential advantage: their domestic focus. Businesses with little or no exports are highly unlikely to be caught up in the ongoing fallout from US-led action on trade tariffs.
Take Aegis Logistics. It is India’s foremost oil, gas and chemicals logistics company, as well as the country’s number-one importer and handler of liquified petroleum gas – a crucial element of the nation’s shift to cleaner energy.
Many of these businesses have been around for years, if not decades. Century Pacific was founded in 1978, when Star Wars was taking cinemas by storm. Aegis Logistics was established in the 1950s, when Kurosawa was at his creative peak.
The truth is that, like those hollowed-out sticks packed with gold, the brightest of Asia’s smaller companies are often hiding in plain sight. Ultimately, in my view, the trick lies in putting in the effort necessary to spot them.
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.
Important information
- The value of investments, and the income from them, can go down as well as up and investors may get back less than the amount invested.
- Past performance is not a guide to future results.
- Emerging markets tend to be more volatile than mature markets and the value of your investment could move sharply up or down.
Other important information:
Issued by abrdn Fund Managers Limited, registered in England and Wales (740118) at 280 Bishopsgate, London EC2M 4AG. The company is authorised and regulated by the Financial Conduct Authority in the UK.
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