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At AlbaCore, we focus on the long-term. As one of Europe’s leading alternative credit specialists, we invest in private capital solutions, opportunistic and dislocated credit, and structured products.
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Specialist in Asia Pacific, China, India and South East Asia and Global Emerging Market equities.
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Our philosophy is very simple. We are constantly searching for high quality businesses and when we acquire them, we will work relentlessly with them to create long-term sustainable value through innovation, ESG-led and proactive asset management.
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formerly Realindex Investments
Leader in active quantitative equities across Australian equities, global equities, emerging markets and global small companies.
Backed by a unique blend of research, portfolio construction and risk management, focused on uncovering original insights and translating them into investment strategies that are active and systematic, aiming to generate alpha.
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At Stewart Investors, we believe in putting people first. Our investment world-view is of a series of partnerships – with each other, with our clients, with the companies we invest in, the people who buy their goods and services, and with the wider society in which we all live and work.
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Learn about investing in global emerging market equities with FSSA IM. Our GEM funds invest in high quality companies that outperform over the long term.
Learn about investing in Asia Pacific equities with FSSA IM today. Our APAC funds invest in high quality companies that outperform over the long term.
Learn about investing in the world's fastest growing markets with FSSA Investment Managers. We invest in high quality equities that outperform over the long term.
This has been an unprecedented time which continues to evolve from a markets and Covid-19 perspective. Please tune in to a panel discussion with FSSA’s lead portfolio managers: Alistair Thompson, Director; Martin Lau, Managing Partner andVinay Agarwal, Director.
Mutations, it would seem, are not unique to the virus. Starting with some housekeeping, we always end our letters seeking feedback from our regular readers. Two common points we have received is that our letters are generally too long and the semi-annual schedule we have adhered to in the past is too infrequent. Therefore, we are pleased to implement a change in the format and cadence of our communications. In this new version, our letters will focus on portfolio updates and brief thoughts on pertinent topics. Moreover, we aim to write on a quarterly basis. This, we hope, will be more suited to the wishes of regular readers. Since our last update, the initial public offering (IPO) frenzy we have observed for the past 12-18 months has continued unabated. This is especially true in India where there have been around 100 IPOs so far this year. These newly-listed entities have raised a combined USD 12bn from investors and yet only 20 of them reported a net profit of more than USD 10m! Undoubtedly, some of these companies will grow into their valuations and, in hindsight, a few might even seem like bargains today. However, the asymmetry of information in any IPO process means that new shareholders are at a disadvantage. Many IPO prospects often fail to answer the following question convincingly: why would a knowledgeable seller, sell part of their business to a less-knowledgeable, non-strategic buyer?
First Sentier Investors today announced unit holders have voted in favour of a change in responsible entity (RE) for a number of funds from Colonial First State to The Trust Company.
The most attractive point about India is that there are about 6,000 listed companies across a diverse range of sectors. That gives us the opportunity to invest in high quality businesses across a range of industries. This is unlike some other emerging markets where investors might find themselves restricted to only a handful of industries. Additionally, India has one of the oldest stock markets in the world. The culture of equity ownership is prevalent and people are familiar with the rules that come with it. Over the years, governance standards, the composition of a board, gender diversity, and protection of minority shareholders — they have all improved. Over time, corporate governance regulations in India have also strengthened significantly. As regulators have tightened rules related to company privatisation, royalty payments and disclosure of related party transactions, the protection of minority shareholder interests has consistently improved. Another aspect that makes India stand out from her emerging market peers is the quality of companies there. In India, you will find many high-quality private companies
The China equity market includes a myriad of share classes, each with distinct characteristics.
Every company we speak to these days tells us about the cost pressure that they are facing, emanating from rising global commodity prices. Domestic steel prices have risen by 35% y/y, copper by over 50% y/y and palm oil by over 60% y/y through February 2021. Indian corporates are being forced to reckon with sharp increases in input costs for the first time in almost a decade. We believe that pricing power is often the critical litmus test of a franchise’s quality.
We have written about the spate of Initial Public Offerings (IPOs) in India and our reasons for staying away from them, for the most part. This time, we want to talk about why new listings are important to keep the market vibrant and to keep the entrepreneurial spirit in the country alive. In the last 18 months or so, India has witnessed more than 120 IPOs and follow-on offerings. This may seem like a maniacal pace, and indeed it is. However, this statistic absolutely pales in comparison to the five-year period from March 1992 to March 1997, during which an astounding 4,712 listings occurred – equivalent to nearly three IPOs every single day for five years!
Leading global investment manager, First Sentier Investors (FSI), today announced the outcome of a review of its existing investment capabilities against its strategy.
In 2020, one group of companies has done particularly well – the popular digital technology companies focused on e-commerce, delivery and entertainment, to name a few industries. In emerging markets, they dominate the Chinese market; but they can also be found in Korea, Southeast Asia, Eastern Europe and Latin America. We do not own many of these in the strategy; and as such, we are often asked: What holds us back? After all, they have performed well and – at least on paper – should have the prerequisite to generate strong returns and free cash flow, given their often high gross margins, negative working capital profiles and asset light nature. While we are not disputing the potential for this in the future, we would argue for cautiousness on most of these projections.
In almost every meeting that we have with management teams, we will ask about incentivisation. In our view, it is an important question and the answer can be highly revealing about an organisation’s culture and behaviour. While it can be easy to be deceived by articulate CEOs talking up a big game with lots of investor-friendly buzzwords, in our experience what ultimately drives outcomes (at least the ones that management teams can influence) are the incentives. As with most things, striking the right balance is key. If there are no incentives to good performance (and no disincentive for poor performance), companies often end up with capital being systematically mis-allocated without any accountability. This tends to be the case with most State-Owned Enterprises (SOEs), which is one of the reasons we are generally cautious on them. On the other hand, too much of a good thing can also have adverse consequences, which we often see in turbo-charged incentive schemes concentrated among just a few senior executives. While they might lead to exponential growth for a short period of time, the growth is usually not sustainable. After a rapid period of expansion, imbalances are typically built up and when growth inevitably slows it is usually not just one skeleton that falls out of the closet.
Since our last update, global markets have not been short of action and the manic behaviour characterising today’s markets has taken investors on another rollercoaster ride. While not quite comparable to the market movements seen during the dark days of March 2020, the recent correction — especially in China-related companies — has been notable. Yet, from a market perspective, a sense of normality is finally starting to emerge after the more speculative phases over the past 12-18 months. Companies related to the Work- or Consumed-From-Home environment are starting to discount a more realistic outlook and, equally, franchises with good long-term prospects that were experiencing temporary uncertainties caused by the pandemic have, for the most part, regained some of the lost ground as their underlying business fundamentals continue to improve.
Despite China being the first country to face the challenges of Covid, early optimism around its control over the virus seems to have waned. As Chinese cities and provinces continue to battle against new variants and local surges, consumer spending is down and the economy is starting to slow. On top of that, there have been increasingly cumbersome regulations on Chinese technology companies, the medical sector and the property market – the latter causing the implosion of a number of property developers late last year. The Chinese government has now shifted to a more accommodating stance in a bid to stabilise the economy. But its “Common Prosperity” goal and zero-Covid policy is likely here to stay. Against this backdrop, FSSA’s portfolio managers discuss their views about the changing opportunity set in China – and how they have positioned the team’s China portfolios to tap into the longer-term growth story.
Strategists often argue that Japan is perhaps the most cyclical market amongst the major global economies, with profits highly correlated to global trade. We disagree. It is true that many of the large index constituents are companies with high overseas exposure or are highly sensitive to forex fluctuations. However, in our view, Japan’s economy is actually very defensive and mainly driven by domestic demand. Japan’s exports account for less than 20% of GDP — far lower than that of Germany or South Korea where more than 40% of GDP is derived from exports. Another misconception about Japan is that the ageing population and prolonged deflationary environment means that there are few quality companies that can deliver high growth and returns. We disagree with that notion too. Especially from a bottom-up perspective, our view is that Japan has a deep investment universe with many high-quality companies that are focused on delivering sustainable growth and returns and are uncorrelated to the global macro environment.
As bottom-up investors, the FSSA team carry out well over 1,500 meetings each year to assess company managements’ capabilities and the underlying strength of the franchises they run. These monthly manager views are based on the team’s discussions with company management and the in-depth analysis that follows.
FSSA India webcast focus on the India Subcontinent Markets and Asia Pacific equities
While the pandemic is still far from over, a number of key leading indicators point to a healthy and broad-based recovery in China. Industrial production, trade activity and retail sales have been strong; and in stark contrast to the lockdowns and travel restrictions in early 2020, domestic travel, tourism and the leisure sectors in China have sprung back to life.
In our last client update, written through the depths of Covid-despair, we observed that real life and the world of markets are seldom so intimately entwined. With markets swinging violently to the downside on a riptide of fear, it was clear even then that activity was being driven by short-term anxiety rather than a real evaluation of Asia’s longer-term value-accretion prospects.
All of us have been brutally confronted by a new reality in the last few months. It has certainly been crude, with financial markets swinging around on a riptide of greed and fear, as we the participants have vacillated between elation and despair. It is not surprising. Life and the world of markets are seldom so intimately entwined.
All of us have been brutally confronted by a new reality in the last few months. It has certainly been crude, with financial markets swinging around on a riptide of greed and fear, as we the participants have vacillated between elation and despair. It is not surprising. Life and the world of markets are seldom so intimately entwined.
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