JPMorgan Asset Management's Top Asian Picks

JPMorgan Asset Management's Top Asian Picks
Theodora Lee Joseph, CFA

26 days ago3 mins

Mentioned in story

Let’s face it, China’s stock market hasn’t exactly been lighting up the leaderboards this year, with the Shanghai Composite index already down 4%. Still, that’s no reason to turn your back on Asia’s vibrant markets altogether. The smart folks over at JPMorgan Asset Management (JPMAM) are buzzing about the investing potential in other spots across the region, and they’ve got some juicy insights to share.

First up, Taiwan and South Korea: this is where it’s at for tech. South Korean firms have been dialing back on the production of dynamic random access memory (DRAM) – the type of memory that’s used in personal computers and servers. And that’s starting to pay off as contract prices climb. This could position those firms for a nicely profitable 2024, with a rebound in mobile phones, PCs, and servers likely just around the corner. Taiwan’s firms are looking hopeful too, with the semiconductor industry bouncing back from a slump in the third quarter of 2023. The island’s leading foundries are smashing expectations with their latest forecasts, riding the wave of surging demand for high-performance computing chips, thanks to AI’s relentless march forward.

Next in line is Japan, an unexpected inflation cheerleader. After decades of the dreaded deflation, prices in the world’s third-biggest economy finally found some upward momentum and are now returning to target. JPMAM’s analysts foresee Japan waving goodbye to its economy-dragging negative interest rates by the latter half of this year, which could help normalize saving and spending behavior, potentially leading to even more buoyant consumer activity and business investment. What’s more, over the longer term, there’s also the impact of ongoing corporate reforms in Japan, particularly for companies trading below book value. Japanese firms are already beginning to return more cash to shareholders in the form of increased dividends and share buybacks, and are making other market-positive changes. The analysts estimate that shares of up to 150 companies in the country could be boosted by the various reforms, meaning there’s plenty of opportunity for stock-picking.

Last, but definitely not least, is India. This powerhouse is defying the norm, with corporate earnings and economic growth moving higher in lockstep. Over the past 20 years, India has shown a tight link between economic growth and market returns – and it’s projected to see economic growth of around 10% every year for the next decade. India’s growth story is fueled by a growing middle class, digitization, and favorable demographics – its workforce is set to expand steadily until the 2030s, while many of the world’s bigger economies watch theirs shrink. This is all happening at a time when China’s long-term growth potential has begun to dim and as its geopolitical tensions have begun to rise, making India an attractive alternate investment destination. Indian stocks may not be dirt cheap (if you look at their price-to-earnings ratio, you’ll see they’ve got higher valuations now than some other emerging markets), but there are several factors favoring India’s economy and stock market, including increased foreign direct investment, reduced corporate debt, new banking sector reforms, business-friendly policies, and all that robust economic growth.

To invest, consider the SS KODEX Korea Taiwan IT ETF (ticker: 298770; expense ratio: 0.55%), the Global X Asia Semiconductor ETF (3119; 0.68%), the iShares MSCI Japan Value ETF (EWJV; 0.15%), the JPMorgan BetaBuilders Japan ETF (BBJP; 0.19%), the iShares MSCI India ETF (INDA; 0.65%), or the Invesco India ETF (PIN; 0.78%).

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Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

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