Investing in high growth Asian frontier economies., Asia Frontier Capital

Scott Osheroff

Investing in high growth Asian frontier economies.

Asia Frontier Capital

Asia Frontier Capital Ltd. is a pioneering fund management company based in Hong Kong that specializes in investing in high growth Asian frontier economies by managing the AFC Asia Frontier Fund , AFC Iraq Fund and the AFC Vietnam Fund.

The AFC Asia Frontier Fund invests in public equities of Asian frontier countries that are seeing increasing consumption due to favorable demographic trends, rising incomes and high GDP growth. The fund invests in listed equities of companies that have their principal business activities in Bangladesh, Bhutan, Cambodia, Iraq, Laos, Maldives, Mongolia, Myanmar (Burma), Nepal, Pakistan, Papua New Guinea, Sri Lanka and Vietnam. The AFC Asia Frontier Fund is positioned to take advantage of the continuing economic shifts in these countries and offers high returns combined with significant diversification opportunities. This fund is directed by the founder and CEO of Asia Frontier Capital, Thomas Hugger, who has been investing in frontier markets across Asia and Africa for more than 20 years.

The AFC Iraq Fund was launched on the 26th June 2015 and aims to achieve long-term capital appreciation for investors by capturing value and growth potential in the post conflict high-growth & resource rich Iraq market. The fund emphasises long term investment horizon to truly capture the opportunity in Iraq. The fund's investable universe consists of locally listed companies that have their principal business activities in Iraq as well as foreign listed companies that have the majority of the business in Iraq as a whole including the prosperous Kurdish Region of Iraq (KRI). The AFC Iraq Fund offers access to investments in post conflict recovery potential of Iraq, including the KRI, and/or stability in its territory. The AFC Iraq Fund is managed by Asia Frontier Capital (Iraq) Limited, Cayman Islands under the executive leadership team of Thomas Hugger (CEO & Fund Manager) and Ahmed Tabaqchali (CIO) who have more than 47 years of investment experience as well as an extensive background covering global, emerging, frontier and MENA markets.

The AFC Vietnam Fund invests exclusively in listed Vietnamese equities to capture value in growth companies with a focus on the small to medium size companies. This market segment offers a unique investment opportunity as the valuation gap between large- and small-cap stocks in Vietnam is presently much wider than in comparable neighboring markets and the valuations are significantly depressed versus their regional peers. The fund adopts a fundamental-quantitative approach and employs an in-house earnings model to identify attractive companies where we see high growth opportunities. In conjunction with targeting the maximum upside potential the portfolio has been structured to mitigate corporate government and liquidity risks. The fund invests in a diversified portfolio of 70-90 attractively valued companies to carefully control concentration risk.  This approach allows the fund to sell, or buy, positions without having a significant market impact. The fund is directed under the executive leadership of Thomas Hugger and Andreas Vogelsanger who have more than 50 years combined experience managing investments in frontier markets, Asia and around the world.

For more information about the fund, management team and investment strategy please contact us at info@asiafrontiercapital.com.

Thematic (Sector/Industry)

In line with our process of being on the ground in the countries we invest in, Scott Osheroff, Analyst at Asia Frontier Capital, travelled to Myanmar and conducted meetings with portfolio companies and other companies on our shortlist. The photos in this article are all by AFC.

In line with our process of being on the ground in the countries we invest in, Scott Osheroff, Analyst at Asia Frontier Capital, travelled to Myanmar and conducted meetings with portfolio companies and other companies on our shortlist. The photos in this article are all by AFC.

Economist, Centennial Asia Advisors

Jason Tan

Economist

Centennial Asia Advisors

At Centennial Asia Advisors, we tell it like it is. We have no vested interests, no need for a China wall, and no reason to skew our outlook any other way. With over 30 years experience covering Asia’s political economy, you can be sure our conclusions and analyses are based on the unadulterated facts. Through years of fine-tuning our research methodologies, we deliver a quality of macroeconomic analysis few other houses can match.

Centennial Asia Advisors is an independent research and advisory firm that works with governments, multilateral institutions, financial firms and leading MNCs.

Economic Policy and Strategic Advisors

Macroeconomics

<ul>
<li>
Industrial production ended the year on a strong note, growing 4.3% y/y in Dec 16, down from the upwardly revised 5.3% in Nov 16. In particular, ICT manufacturing grew at a rapid 8.7% in Dec 16, up from 6.3% in Nov 16. Stronger export demand is supporting South Korea’s production activity, especially for electronic parts and components.</li>
<li>
Double-digit growth for exports and imports - the strongest since Feb 12 - heralded a strong start for South Korea in 2017. Exports increased 11.0% y/y in Jan 17…</li>
</ul>



Industrial production ended the year on a strong note, growing 4.3% y/y in Dec 16, down from the upwardly revised 5.3% in Nov 16. In particular, ICT manufacturing grew at a rapid 8.7% in Dec 16, up from 6.3% in Nov 16. Stronger export demand is supporting South Korea’s production activity, especially for electronic parts and components.

Double-digit growth for exports and imports - the strongest since Feb 12 - heralded a strong start for South Korea in 2017. Exports increased 11.0% y/y in Jan 17…


<ul><li>US President Donald Trump has officially withdrawn US from the TPP agreement. This wave of American isolationism is in stark contrast to the openness projected by China in recent weeks; China is poised to become increasingly influential in Asia.</li><li>While existing TPP members can forge ahead and implement some sort of a TPP-lite deal without the US, countries may not be willing to open up politically sensitive sectors without commensurate economic returns that is access to the large US market.</li><li>Export-oriented Asian economies could find it pragmatic and beneficial to establish closer economic ties with China and accept closer geostrategic relations too. Already, talks of accelerating the RCEP and even inviting China to participate in the TPP have begun.</li></ul>

US President Donald Trump has officially withdrawn US from the TPP agreement. This wave of American isolationism is in stark contrast to the openness projected by China in recent weeks; China is poised to become increasingly influential in Asia.While existing TPP members can forge ahead and implement some sort of a TPP-lite deal without the US, countries may not be willing to open up politically sensitive sectors without commensurate economic returns that is access to the large US market.Export-oriented Asian economies could find it pragmatic and beneficial to establish closer economic ties with China and accept closer geostrategic relations too. Already, talks of accelerating the RCEP and even inviting China to participate in the TPP have begun.

Asian Economic Integration Headed in a New Direction

<ul><li>A recovery in global demand led by the G3 advanced economies have fed into export upturns in trade-focused East Asian economies. Japan, South Korea, Taiwan and Hong Kong have seen the renewed vigour in global trade leading to more robust growth.</li><li>Furthermore, other Asian countries, such as those in Southeast Asia, will also see economic expansion being underpinned by an export upswing, chiefly in electronics and other tech components.</li></ul>

A recovery in global demand led by the G3 advanced economies have fed into export upturns in trade-focused East Asian economies. Japan, South Korea, Taiwan and Hong Kong have seen the renewed vigour in global trade leading to more robust growth.Furthermore, other Asian countries, such as those in Southeast Asia, will also see economic expansion being underpinned by an export upswing, chiefly in electronics and other tech components.

Trade Intensity Leading to Asian Expansion

Global Asset Allocation, Politics & Governance, Ecstrat

John-Paul Smith

Global Asset Allocation, Politics & Governance

Ecstrat

Ecstrat is a consultancy advising on asset allocation between global equity markets, with a focus on the intersection of governments, geopolitics, governance and markets.
 
Over the past few years and more especially since the Great Financial Crisis (GFC), investors have become more focused on short-term market movements and real-time returns and have consequently neglected the analysis of the underlying structural themes that underpin longer term performance.
​
More specifically we believe that the evolution of governance-based relationships between investors, controlling shareholders, labour and the state is one of the primary determinants of both relative and absolute performance between individual equity markets.
 
We will endeavour to provide investors with some of the context surrounding governance-related issues which encompass many different disciplines including history, economics and political science, as well as the financial metrics which are the most obvious manifestation of the structural characteristics of each market.
 
We will pay particular attention to the shifts and potential inflection points for governance in individual markets as these are often the best lead indicators for both economic and market performance.

Cross Asset Strategy

In this series of reports, we focus on the major sovereign and corporate governance drivers of the individual emerging markets. As usual the emphasis is on the context and marginal shift in the relationship between the listed corporate sector and the major stakeholders in particular the state, from a minority shareholder’s perspective. This very granular focus makes us sceptical about the customary marketing hype from the investment management industry concerning the inevitability of long term EM equity outperformance, as the fundamental criteria do not seem to justify this optimism.The main governance issues for emerging equity investors in 2017 are as follows:<ul><li>The Chinese authorities will continue to favour fiscal and monetary stimulus over the implementation of corporate reforms until they are no longer able to do so;</li><li>The incoming US administration is more likely to impose stricter sanctions against Russia than to repeal them;</li><li>Minority investors will not necessarily be beneficiaries of the current attacks on the chaebol structures in Korea;</li><li>The ongoing debt squeeze and the Tata imbroglio will prompt incremental change in the management of Indian family/promoter controlled companies;</li><li>There is a low likelihood of further forced redistribution of control among listed Polish companies, but the governance risks are higher in Turkey and Malaysia;</li><li>Populist politicians are likely to gain further ground in Korea, Chile, Mexico and Brazil</li></ul>

In this series of reports, we focus on the major sovereign and corporate governance drivers of the individual emerging markets. As usual the emphasis is on the context and marginal shift in the relationship between the listed corporate sector and the major stakeholders in particular the state, from a minority shareholder’s perspective. This very granular focus makes us sceptical about the customary marketing hype from the investment management industry concerning the inevitability of long term EM equity outperformance, as the fundamental criteria do not seem to justify this optimism.The main governance issues for emerging equity investors in 2017 are as follows:The Chinese authorities will continue to favour fiscal and monetary stimulus over the implementation of corporate reforms until they are no longer able to do so;The incoming US administration is more likely to impose stricter sanctions against Russia than to repeal them;Minority investors will not necessarily be beneficiaries of the current attacks on the chaebol structures in Korea;The ongoing debt squeeze and the Tata imbroglio will prompt incremental change in the management of Indian family/promoter controlled companies;There is a low likelihood of further forced redistribution of control among listed Polish companies, but the governance risks are higher in Turkey and Malaysia;Populist politicians are likely to gain further ground in Korea, Chile, Mexico and Brazil

Emerging Market Equities in 2017; Key Issues to Monitor by Market (Part 1 of 7)

South Korea

Samsung KODEX Securities ETF is an Exchange Traded Fund established in South Korea. The Fund's objective is to provide investment return that tracks the KRX Securities Index. The Fund invests 60% or more in equities, with a portfolio of KRX Securities Index holdings with low risk and high 
liquidity based on the Sampling Method.

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Samsung Kodex Securities ETF (102970 KS)

Myanmar Travel Report

In line with our process of being on the ground in the countries we invest in, Scott Osheroff, Analyst at Asia Frontier Capital, travelled to...

Asia Frontier Capital

South Korea: Exports - The Saviour

Industrial production ended the year on a strong note, growing 4.3% y/y in Dec 16, down from the upwardly revised 5.3% in Nov 16. In particular,...

Jason Tan

Asian Economic Integration Headed in a New Direction

US President Donald Trump has officially withdrawn US from the TPP agreement. This wave of American isolationism is in stark contrast to the...

Jason Tan

Trade Intensity Leading to Asian Expansion

A recovery in global demand led by the G3 advanced economies have fed into export upturns in trade-focused East Asian economies. Japan, South...

Jason Tan

Emerging Market Equities in 2017; Key Issues to Monitor by Market (Part 1 of 7)

In this series of reports, we focus on the major sovereign and corporate governance drivers of the individual emerging markets. As usual the...

John-Paul Smith

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)