Chief Economist & Political Strategist, CrossASEAN Research

Prasenjit K. Basu

Chief Economist & Political Strategist

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Macroeconomics

<p><em><strong>Taiwan's real GDP grew 3.1% in 2020 (faster than the PRC's 2.3%), and accelerated to 8.2% YoY growth in 1Q 2021, led by a capex surge. The latter should accelerate further as the global semiconductor shortage and surging demand for computers, parts and peripherals induce an investment boom in Taiwan. We recommend staying solidly Overweight Taiwan. </strong></em></p><p>Taiwan's real GDP accelerated to 8.2% YoY growth in 1Q 2021, after growing 3.1% in 2020 -- faster than the People's Republic of China's 2.3% -- including an acceleration to 4.7% YoY growth in 2H 2020. Over the latest 4 quarters, Taiwan has comfortably had the fastest-growing economy among the world's developed economies, with its real GDP expanding 4.5%, the rare economy without a solitary quarter of YoY contraction in 2020. The acceleration in 1Q 2021 was led by a surge in net external demand, bolstered by 8.3% YoY growth in gross investment. The global semiconductor cycle will continue to bolster net-external-demand-led growth through the rest of 2021, with 2Q 2021 likely to see close to 10% YoY growth. For the full year, Taiwan's real GDP will likely grow 7%.</p><p>Exports expanded 27.3% YoY in March 2021 (and 24.5% YoY in 1Q 2021), led by soaring demand for semiconductors and computers (including parts like PCBs, for all of which Taiwan is a leading global manufacturer), and even stronger growth in smaller export categories like plastics and chemicals. Imports accelerated to 20.9% YoY growth in 1Q 2021, reflecting the strengthening of domestic demand, which broadened the economic recovery. </p><p>The global electronics cycle will likely spur continued strength in Taiwan's economy through the rest of this year. The semiconductor shortage has played to Taiwan's core strength, and demand for computers &amp; parts (benefiting <a href="https://www.smartkarma.com/entities/acer-inc" target="_blank" data-smartkarma-citation="entities:15726:1" rel="noopener">Acer Inc (2353 TT)</a> and <a href="https://www.smartkarma.com/entities/asustek-computer-inc" target="_blank" data-smartkarma-citation="entities:13002:1" rel="noopener">Asustek Computer (2357 TT)</a>) should also remain strong. The major global winner remains <a href="https://www.smartkarma.com/entities/taiwan-semiconductor-sp-adr" target="_blank" data-smartkarma-citation="entities:8587:1" rel="noopener">Taiwan Semiconductor Sp Adr (TSM US)</a> , which has taken a huge lead at the top end of the semiconductor chain (with 84% global market share in 5nm ICs), and is ploughing much of its US$20 billion profits last year (from US$48 billion revenue) into re-investment to widen its lead over its competitors. While any such capex surge in cutting-edge technology is inherently risky/uncertain, <a href="https://www.smartkarma.com/entities/taiwan-semiconductor-sp-adr" target="_blank" data-smartkarma-citation="entities:8587:1" rel="noopener">Taiwan Semiconductor Sp Adr (TSM US)</a> 's market positioning raises the probability of success, implying greater pricing power as its lead over rivals expands further. That Taiwanese corporates have been careful to ensure that the high end of their manufacturing (cutting-edge technology, capital-goods output, research and design) stays in Taiwan (creating an annual bilateral trade surplus of over US$100 billion with the PRC). Although the PRC is the largest destination for Taiwan's exports, the processing in the PRC can be gradually moved elsewhere (Vietnam, Malaysia, India) if it becomes politically/militarily threatened. The capex-led growth of Taiwanese corporates should hugely bolster Taiwan's economy this year, and we recommend staying solidly Overweight Taiwan.   </p>

Taiwan's real GDP grew 3.1% in 2020 (faster than the PRC's 2.3%), and accelerated to 8.2% YoY growth in 1Q 2021, led by a capex surge. The latter should accelerate further as the global semiconductor shortage and surging demand for computers, parts and peripherals induce an investment boom in Taiwan. We recommend staying solidly Overweight Taiwan. Taiwan's real GDP accelerated to 8.2% YoY growth in 1Q 2021, after growing 3.1% in 2020 -- faster than the People's Republic of China's 2.3% -- including an acceleration to 4.7% YoY growth in 2H 2020. Over the latest 4 quarters, Taiwan has comfortably had the fastest-growing economy among the world's developed economies, with its real GDP expanding 4.5%, the rare economy without a solitary quarter of YoY contraction in 2020. The acceleration in 1Q 2021 was led by a surge in net external demand, bolstered by 8.3% YoY growth in gross investment. The global semiconductor cycle will continue to bolster net-external-demand-led growth through the rest of 2021, with 2Q 2021 likely to see close to 10% YoY growth. For the full year, Taiwan's real GDP will likely grow 7%.Exports expanded 27.3% YoY in March 2021 (and 24.5% YoY in 1Q 2021), led by soaring demand for semiconductors and computers (including parts like PCBs, for all of which Taiwan is a leading global manufacturer), and even stronger growth in smaller export categories like plastics and chemicals. Imports accelerated to 20.9% YoY growth in 1Q 2021, reflecting the strengthening of domestic demand, which broadened the economic recovery. The global electronics cycle will likely spur continued strength in Taiwan's economy through the rest of this year. The semiconductor shortage has played to Taiwan's core strength, and demand for computers &amp; parts (benefiting Acer Inc (2353 TT) and Asustek Computer (2357 TT)) should also remain strong. The major global winner remains Taiwan Semiconductor Sp Adr (TSM US) , which has taken a huge lead at the top end of the semiconductor chain (with 84% global market share in 5nm ICs), and is ploughing much of its US$20 billion profits last year (from US$48 billion revenue) into re-investment to widen its lead over its competitors. While any such capex surge in cutting-edge technology is inherently risky/uncertain, Taiwan Semiconductor Sp Adr (TSM US) 's market positioning raises the probability of success, implying greater pricing power as its lead over rivals expands further. That Taiwanese corporates have been careful to ensure that the high end of their manufacturing (cutting-edge technology, capital-goods output, research and design) stays in Taiwan (creating an annual bilateral trade surplus of over US$100 billion with the PRC). Although the PRC is the largest destination for Taiwan's exports, the processing in the PRC can be gradually moved elsewhere (Vietnam, Malaysia, India) if it becomes politically/militarily threatened. The capex-led growth of Taiwanese corporates should hugely bolster Taiwan's economy this year, and we recommend staying solidly Overweight Taiwan.   

Taiwan: The Rich World's Growth Star Continues to Shine

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Quantitative Analysis

<div><p>The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.</p></div><div><p>Hong Kong saw shorts rise on <a href="https://www.smartkarma.com/entities/ind-comm-bk-of-china-h" target="_blank" data-smartkarma-citation="entities:1119:1" rel="noopener">ICBC (H) (1398 HK)</a>, <a href="https://www.smartkarma.com/entities/china-mobile-ltd" target="_blank" data-smartkarma-citation="entities:27:1" rel="noopener">China Mobile (941 HK)</a>, <a href="https://www.smartkarma.com/entities/cnooc-ltd" target="_blank" data-smartkarma-citation="entities:175:1" rel="noopener">CNOOC Ltd (883 HK)</a> and <a href="https://www.smartkarma.com/entities/byd-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20962:1" rel="noopener">BYD (1211 HK)</a> while there was short covering on <a href="https://www.smartkarma.com/entities/xiaomi-corp" target="_blank" data-smartkarma-citation="entities:24409:1" rel="noopener">Xiaomi Corp (1810 HK)</a>, <a href="https://www.smartkarma.com/entities/xinyi-solar-holdings-ltd" target="_blank" data-smartkarma-citation="entities:318:1" rel="noopener">Xinyi Solar Holdings (968 HK)</a>, <a href="https://www.smartkarma.com/entities/hong-kong-exchanges-clearing" target="_blank" data-smartkarma-citation="entities:490:1" rel="noopener">HKEX (388 HK)</a> and <a href="https://www.smartkarma.com/entities/jd-com-inc" target="_blank" data-smartkarma-citation="entities:29043:1" rel="noopener">JD.com (HK) (9618 HK)</a>. Shorts increased on Communication Services, Energy and Consumer Staples, and decreased on Information Technology, Financials and Consumer Discretionary.</p></div><div><p>In Japan, stocks that saw the most shorts were <a href="https://www.smartkarma.com/entities/change-inc" target="_blank" data-smartkarma-citation="entities:27414:1" rel="noopener">Change Inc (3962 JP)</a>, <a href="https://www.smartkarma.com/entities/advantest-corp" target="_blank" data-smartkarma-citation="entities:18107:1" rel="noopener">Advantest Corp (6857 JP)</a>, <a href="https://www.smartkarma.com/entities/renova-inc" target="_blank" data-smartkarma-citation="entities:26753:1" rel="noopener">RENOVA Inc (9519 JP)</a> and <a href="https://www.smartkarma.com/entities/shimamura-co-ltd" target="_blank" data-smartkarma-citation="entities:15213:1" rel="noopener">Shimamura (8227 JP)</a> while shorts decreased on <a href="https://www.smartkarma.com/entities/honda-motor-co-ltd" target="_blank" data-smartkarma-citation="entities:154:1" rel="noopener">Honda Motor (7267 JP)</a>, <a href="https://www.smartkarma.com/entities/kao-corp" target="_blank" data-smartkarma-citation="entities:12933:1" rel="noopener">Kao Corp (4452 JP)</a>, <a href="https://www.smartkarma.com/entities/canon-inc" target="_blank" data-smartkarma-citation="entities:1:1" rel="noopener">Canon Inc (7751 JP)</a> and <a href="https://www.smartkarma.com/entities/bridgestone-corp" target="_blank" data-smartkarma-citation="entities:8914:1" rel="noopener">Bridgestone Corp (5108 JP)</a>. Sectorally, shorts increased on Utilities and Communication Services, while decreasing on Consumer Discretionary, Consumer Staples, Information Technology and Industrials.</p></div><div><p>In Korea, there were short positions put on in <a href="https://www.smartkarma.com/entities/kt-corp" target="_blank" data-smartkarma-citation="entities:1112:1" rel="noopener">KT Corp (030200 KS)</a>, <a href="https://www.smartkarma.com/entities/samsung-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:191:1" rel="noopener">Samsung Electronics (005930 KS)</a>, <a href="https://www.smartkarma.com/entities/lg-uplus-corp" target="_blank" data-smartkarma-citation="entities:1113:1" rel="noopener">LG Uplus Corp (032640 KS)</a> and <a href="https://www.smartkarma.com/entities/kakao-corp" target="_blank" data-smartkarma-citation="entities:15002:1" rel="noopener">Kakao Corp (035720 KS)</a>. </p></div><div><p>Stocks in Taiwan that saw the highest increase in shorts were <a href="https://www.smartkarma.com/entities/taiwan-semiconductor-manufacturing-company" target="_blank" data-smartkarma-citation="entities:11230:1" rel="noopener">TSMC (2330 TT)</a>, <a href="https://www.smartkarma.com/entities/largan-precision-co-ltd" target="_blank" data-smartkarma-citation="entities:9126:1" rel="noopener">Largan Precision (3008 TT)</a>, <a href="https://www.smartkarma.com/entities/pegatron-corp" target="_blank" data-smartkarma-citation="entities:12852:1" rel="noopener">Pegatron Corp (4938 TT)</a> and <a href="https://www.smartkarma.com/entities/asustek-computer-inc" target="_blank" data-smartkarma-citation="entities:13002:1" rel="noopener">Asustek Computer (2357 TT)</a> while shorts were covered on <a href="https://www.smartkarma.com/entities/evergreen-marine-corp-ltd" target="_blank" data-smartkarma-citation="entities:15428:1" rel="noopener">Evergreen Marine Corp (2603 TT)</a>, <a href="https://www.smartkarma.com/entities/walsin-technology-corp" target="_blank" data-smartkarma-citation="entities:11084:1" rel="noopener">Walsin Technology (2492 TT)</a>, <a href="https://www.smartkarma.com/entities/richwave-technology-corp" target="_blank" data-smartkarma-citation="entities:18629:1" rel="noopener">Richwave Technology (4968 TT)</a> and <a href="https://www.smartkarma.com/entities/pan-jit-international-inc" target="_blank" data-smartkarma-citation="entities:12501:1" rel="noopener">Pan Jit International (2481 TT)</a>. </p></div>

The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.Hong Kong saw shorts rise on ICBC (H) (1398 HK), China Mobile (941 HK), CNOOC Ltd (883 HK) and BYD (1211 HK) while there was short covering on Xiaomi Corp (1810 HK), Xinyi Solar Holdings (968 HK), HKEX (388 HK) and JD.com (HK) (9618 HK). Shorts increased on Communication Services, Energy and Consumer Staples, and decreased on Information Technology, Financials and Consumer Discretionary.In Japan, stocks that saw the most shorts were Change Inc (3962 JP), Advantest Corp (6857 JP), RENOVA Inc (9519 JP) and Shimamura (8227 JP) while shorts decreased on Honda Motor (7267 JP), Kao Corp (4452 JP), Canon Inc (7751 JP) and Bridgestone Corp (5108 JP). Sectorally, shorts increased on Utilities and Communication Services, while decreasing on Consumer Discretionary, Consumer Staples, Information Technology and Industrials.In Korea, there were short positions put on in KT Corp (030200 KS), Samsung Electronics (005930 KS), LG Uplus Corp (032640 KS) and Kakao Corp (035720 KS). Stocks in Taiwan that saw the highest increase in shorts were TSMC (2330 TT), Largan Precision (3008 TT), Pegatron Corp (4938 TT) and Asustek Computer (2357 TT) while shorts were covered on Evergreen Marine Corp (2603 TT), Walsin Technology (2492 TT), Richwave Technology (4968 TT) and Pan Jit International (2481 TT). 

Asia Short Interest: China Mobile, CNOOC, Xiaomi, JD, Change, KT, Samsung, TSMC, Largan

<div><p>The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.</p></div><div><p>Hong Kong saw shorts rise on <a href="https://www.smartkarma.com/entities/ping-an-insurance-grp-co-of-china-ltd" target="_blank" data-smartkarma-citation="entities:12880:1" rel="noopener">Ping An Insurance (H) (2318 HK)</a>, <a href="https://www.smartkarma.com/entities/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</a>, <a href="https://www.smartkarma.com/entities/haier-electronics-group-co" target="_blank" data-smartkarma-citation="entities:4877:1" rel="noopener">Haier Electronics Group Co (1169 HK)</a> and <a href="https://www.smartkarma.com/entities/ping-an-healthcare-and-technology-company-limited" target="_blank" data-smartkarma-citation="entities:27008:1" rel="noopener">Ping An Healthcare and Technology Company Limited (1833 HK)</a> while there was short covering on <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a>, <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a>, <a href="https://www.smartkarma.com/entities/sunny-optical-tech" target="_blank" data-smartkarma-citation="entities:13363:1" rel="noopener">Sunny Optical (2382 HK)</a> and <a href="https://www.smartkarma.com/entities/aia-group-ltd" target="_blank" data-smartkarma-citation="entities:14895:1" rel="noopener">AIA Group Ltd (1299 HK)</a>. Shorts increased in Financials and Health Care stocks, and decreased on Consumer Discretionary, Industrials, Communication Services, Information Technology and Real Estate names.</p></div><div><p>In Japan, stocks that saw the most shorts were <a href="https://www.smartkarma.com/entities/itochu-corp" target="_blank" data-smartkarma-citation="entities:18448:1" rel="noopener">Itochu Corp (8001 JP)</a>, <a href="https://www.smartkarma.com/entities/nippon-building-fund-inc" target="_blank" data-smartkarma-citation="entities:1900:1" rel="noopener">Nippon Building Fund (8951 JP)</a>, <a href="https://www.smartkarma.com/entities/mercari-inc" target="_blank" data-smartkarma-citation="entities:27149:1" rel="noopener">Mercari Inc (4385 JP)</a> and <a href="https://www.smartkarma.com/entities/miura-co-ltd" target="_blank" data-smartkarma-citation="entities:20185:1" rel="noopener">Miura Co Ltd (6005 JP)</a> while shorts decreased on <a href="https://www.smartkarma.com/entities/toshiba-corp" target="_blank" data-smartkarma-citation="entities:637:1" rel="noopener">Toshiba Corp (6502 JP)</a>, <a href="https://www.smartkarma.com/entities/fuji-corp-aichi" target="_blank" data-smartkarma-citation="entities:12942:1" rel="noopener">Fuji Machine Mfg (6134 JP)</a>, <a href="https://www.smartkarma.com/entities/casio-computer-co-ltd" target="_blank" data-smartkarma-citation="entities:18338:1" rel="noopener">Casio Computer (6952 JP)</a> and <a href="https://www.smartkarma.com/entities/ricoh-company-ltd" target="_blank" data-smartkarma-citation="entities:15359:1" rel="noopener">Ricoh Company Ltd (7752 JP)</a>. Sectorally, shorts increased on Consumer Discretionary, Real Estate and Financials, while shorts were covered on Consumer Staples.</p></div><div><p>In Korea, the biggest increase in shorts were seen on <a href="https://www.smartkarma.com/entities/hyundai-motor-co" target="_blank" data-smartkarma-citation="entities:155:1" rel="noopener">Hyundai Motor Co (005380 KS)</a>, <a href="https://www.smartkarma.com/entities/hyundai-heavy-industries" target="_blank" data-smartkarma-citation="entities:10155:1" rel="noopener">Hyundai Heavy Industries (009540 KS)</a> and <a href="https://www.smartkarma.com/entities/samsung-sdi-co-ltd" target="_blank" data-smartkarma-citation="entities:503:1" rel="noopener">Samsung SDI (006400 KS)</a> while shorts were covered on <a href="https://www.smartkarma.com/entities/amorepacific-corp" target="_blank" data-smartkarma-citation="entities:20854:1" rel="noopener">Amorepacific Corp (090430 KS)</a>, <a href="https://www.smartkarma.com/entities/sk-chemicals-co-ltd-new" target="_blank" data-smartkarma-citation="entities:26190:1" rel="noopener">Sk Chemicals Co Ltd/New (285130 KS)</a>, <a href="https://www.smartkarma.com/entities/s-oil-corp" target="_blank" data-smartkarma-citation="entities:1667:1" rel="noopener">S Oil Corp (010950 KS)</a> and <a href="https://www.smartkarma.com/entities/hmm-co-ltd" target="_blank" data-smartkarma-citation="entities:13494:1" rel="noopener">HMM Co., Ltd. (011200 KS)</a>. </p></div><div><p>Stocks in Taiwan that saw the highest increase in shorts were <a href="https://www.smartkarma.com/entities/asustek-computer-inc" target="_blank" data-smartkarma-citation="entities:13002:1" rel="noopener">Asustek Computer (2357 TT)</a>, <a href="https://www.smartkarma.com/entities/wiwynn-corp" target="_blank" data-smartkarma-citation="entities:27838:1" rel="noopener">Wiwynn Corp (6669 TT)</a>, <a href="https://www.smartkarma.com/entities/acer-inc" target="_blank" data-smartkarma-citation="entities:15726:1" rel="noopener">Acer Inc (2353 TT)</a> and <a href="https://www.smartkarma.com/entities/largan-precision-co-ltd" target="_blank" data-smartkarma-citation="entities:9126:1" rel="noopener">Largan Precision (3008 TT)</a> while shorts were covered on <a href="https://www.smartkarma.com/entities/unimicron-technology-corp" target="_blank" data-smartkarma-citation="entities:18778:1" rel="noopener">Unimicron Technology (3037 TT)</a>, <a href="https://www.smartkarma.com/entities/century-iron-steel-indus" target="_blank" data-smartkarma-citation="entities:8853:1" rel="noopener">Century Iron &amp; Steel Indus (9958 TT)</a>, <a href="https://www.smartkarma.com/entities/yageo-corporation" target="_blank" data-smartkarma-citation="entities:13212:1" rel="noopener">Yageo Corporation (2327 TT)</a> and <a href="https://www.smartkarma.com/entities/formosa-petrochemical-corp" target="_blank" data-smartkarma-citation="entities:20875:1" rel="noopener">Formosa Petrochemical (6505 TT)</a>. </p></div>

The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.Hong Kong saw shorts rise on Ping An Insurance (H) (2318 HK), Alibaba Group (9988 HK), Haier Electronics Group Co (1169 HK) and Ping An Healthcare and Technology Company Limited (1833 HK) while there was short covering on Meituan (3690 HK), Tencent Holdings (700 HK), Sunny Optical (2382 HK) and AIA Group Ltd (1299 HK). Shorts increased in Financials and Health Care stocks, and decreased on Consumer Discretionary, Industrials, Communication Services, Information Technology and Real Estate names.In Japan, stocks that saw the most shorts were Itochu Corp (8001 JP), Nippon Building Fund (8951 JP), Mercari Inc (4385 JP) and Miura Co Ltd (6005 JP) while shorts decreased on Toshiba Corp (6502 JP), Fuji Machine Mfg (6134 JP), Casio Computer (6952 JP) and Ricoh Company Ltd (7752 JP). Sectorally, shorts increased on Consumer Discretionary, Real Estate and Financials, while shorts were covered on Consumer Staples.In Korea, the biggest increase in shorts were seen on Hyundai Motor Co (005380 KS), Hyundai Heavy Industries (009540 KS) and Samsung SDI (006400 KS) while shorts were covered on Amorepacific Corp (090430 KS), Sk Chemicals Co Ltd/New (285130 KS), S Oil Corp (010950 KS) and HMM Co., Ltd. (011200 KS). Stocks in Taiwan that saw the highest increase in shorts were Asustek Computer (2357 TT), Wiwynn Corp (6669 TT), Acer Inc (2353 TT) and Largan Precision (3008 TT) while shorts were covered on Unimicron Technology (3037 TT), Century Iron &amp; Steel Indus (9958 TT), Yageo Corporation (2327 TT) and Formosa Petrochemical (6505 TT). 

Asia Short Interest Weekly: Haier, Sunny Optical, Itochu, Mercari, Toshiba, HMM, Asustek, Acer

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Bottom-Up

<p>Razer released its 1H20 results after market close. Overall, we think the 1H20 suggests that Razer is finally heading in the right direction due to accelerating growth, sustained mix shift to software &amp; services, adjusted EBITDA profitability and cash generation. Along with undemanding valuation and strong underpinning from a sizeable cash position, we think that the shares are worth a closer look. </p>

Razer released its 1H20 results after market close. Overall, we think the 1H20 suggests that Razer is finally heading in the right direction due to accelerating growth, sustained mix shift to software &amp; services, adjusted EBITDA profitability and cash generation. Along with undemanding valuation and strong underpinning from a sizeable cash position, we think that the shares are worth a closer look. 

<p>Taiwan's industrial production has expanded in each of the last 5 months, accelerating in June 2020 to 7.3% YoY growth. This reflects the fact that, despite its deep commercial ties with the PRC, Taiwan has successfully contained the impact of Covid-19. With just 458 cases in total (of which 440 have recovered, 7 died and just 11 currently have Covid), Taiwan's economy has remained open throughout the global crisis, averting the impact of the global recession. </p><p>Exports were the one sector that couldn't be immune to the global slump. They declined 3% YoY in 2Q 2020, but the trade surplus widened YoY to US$11.8 billion for the quarter. More pertinently, Taiwan's export orders rose 6.5% YoY in June, with ICT orders soaring 17.1% YoY and electronics orders 23.2% YoY. Taiwan is set to reap the benefits of the re-shoring of manufactured-export capacity back to Taiwan from China over the past couple of years, and will likely see a considerable acceleration of economic activity in 2H 2020.  </p><p>Taiwan's fiscal measures to combat Covid have been focused on re-training, job-support subsidies, and incentives for investments in re-making workplaces for the post-Covid era (with provisions for social distancing and other health/safety measures). Specific economic stimulus measures included support to SMEs, loan and credit-card payment extensions, and reduction in interest rates on residential and consumer loans (by 0.5% and 0.75% respectively). These supportive measures have buoyed domestic demand at a time when the tourist-facing sectors (like in the rest of the world) are seeing a sharp contraction. Real GDP is likely to still have grown over 1.5% YoY in 1H 2020, and will likely accelerate to over 3% YoY growth in 2H 2020, and into 2021. Taiwanese companies like <a href="https://www.smartkarma.com/entities/taiwan-semiconductor-sp-adr" target="_blank" data-smartkarma-citation="entities:8587:1" rel="noopener">Taiwan Semiconductor Sp Adr (TSM US)</a> , <a href="https://www.smartkarma.com/entities/asustek-computer-inc" target="_blank" data-smartkarma-citation="entities:13002:1" rel="noopener">Asustek Computer (2357 TT)</a> , <a href="https://www.smartkarma.com/entities/acer-inc" target="_blank" data-smartkarma-citation="entities:15726:1" rel="noopener">Acer Inc (2353 TT)</a> , <a href="https://www.smartkarma.com/entities/hon-hai-precision-industry-co-ltd" target="_blank" data-smartkarma-citation="entities:745:1" rel="noopener">Hon Hai Precision Industry (2317 TT)</a>, <a href="https://www.smartkarma.com/entities/foxconn-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:11950:1" rel="noopener">Foxconn Technology (2354 TT)</a> are ideally positioned to benefit from the powerful rebound in export demand, as is <a href="https://www.smartkarma.com/entities/yue-yuen-industrial-hldg" target="_blank" data-smartkarma-citation="entities:12281:1" rel="noopener">Yue Yuen Industrial Hldg (551 HK)</a> with most of its manufacturing based in Vietnam (the other Asian economy relatively unscathed by Covid). We recommend investors stay solidly Overweight Taiwan. </p>

Taiwan's industrial production has expanded in each of the last 5 months, accelerating in June 2020 to 7.3% YoY growth. This reflects the fact that, despite its deep commercial ties with the PRC, Taiwan has successfully contained the impact of Covid-19. With just 458 cases in total (of which 440 have recovered, 7 died and just 11 currently have Covid), Taiwan's economy has remained open throughout the global crisis, averting the impact of the global recession. Exports were the one sector that couldn't be immune to the global slump. They declined 3% YoY in 2Q 2020, but the trade surplus widened YoY to US$11.8 billion for the quarter. More pertinently, Taiwan's export orders rose 6.5% YoY in June, with ICT orders soaring 17.1% YoY and electronics orders 23.2% YoY. Taiwan is set to reap the benefits of the re-shoring of manufactured-export capacity back to Taiwan from China over the past couple of years, and will likely see a considerable acceleration of economic activity in 2H 2020.  Taiwan's fiscal measures to combat Covid have been focused on re-training, job-support subsidies, and incentives for investments in re-making workplaces for the post-Covid era (with provisions for social distancing and other health/safety measures). Specific economic stimulus measures included support to SMEs, loan and credit-card payment extensions, and reduction in interest rates on residential and consumer loans (by 0.5% and 0.75% respectively). These supportive measures have buoyed domestic demand at a time when the tourist-facing sectors (like in the rest of the world) are seeing a sharp contraction. Real GDP is likely to still have grown over 1.5% YoY in 1H 2020, and will likely accelerate to over 3% YoY growth in 2H 2020, and into 2021. Taiwanese companies like Taiwan Semiconductor Sp Adr (TSM US) , Asustek Computer (2357 TT) , Acer Inc (2353 TT) , Hon Hai Precision Industry (2317 TT), Foxconn Technology (2354 TT) are ideally positioned to benefit from the powerful rebound in export demand, as is Yue Yuen Industrial Hldg (551 HK) with most of its manufacturing based in Vietnam (the other Asian economy relatively unscathed by Covid). We recommend investors stay solidly Overweight Taiwan. 

Taiwan: Recession? What Recession? A Model Democracy Combats Covid

Taiwan

Asustek Computer Inc. manufactures and markets computer motherboards, interface cards, notebook computers, and other related products.

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Asustek Computer (2357 TT)

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