Asia’s growth story runs far wider than AI – three high-conviction examples from SDP
When talking with investors about Asia today, the conversation frequently turns quickly to technology. Artificial intelligence (AI), semiconductors and the companies building the infrastructure behind them dominate the discussion – and with good reason. Asia sits at the heart of the global technology supply chain, and the region is home to some of the businesses most important to the AI story. The excitement is justified, and it explains why Schroder AsiaPacific Fund (SDP) remains overweight the technology sector. We continue to see attractive long-term opportunities there.
But technology is only part of the picture. The sector has dominated returns in recent months but, inevitably, that will not always be the case. As and when markets broaden, investors will need to rely on exposure to a wider range of growth opportunities.
Where the crowd isn’t looking
Fortunately, Asia is the beneficiary of a number of long-term structural growth themes, which are currently receiving far less attention than technology. For example, rising consumer spending, increasing financial penetration, the modernisation of retail, growing travel demand, industrial innovation and investment in energy infrastructure are all gathering pace across the region, creating a wealth of opportunity for active investors prepared to look beyond the AI winners.
Indeed, the opportunity is amplified by the impact that short-term popularity can have on valuations. Crowded trades can become expensive as capital concentrates in a small number of well-understood names. Areas that suffer investor neglect, by contrast, can often be where the most compelling long-term opportunities are found.
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