Avoiding the regional pitfalls
As Chinese manufacturing becomes gradually priced out by Vietnam, Indonesia and Bangladesh, Siew Hua Thio from Tantallon Capital expects increasing numbers of factories to move their production out of China.
“New environmental regulations have also lifted the cost of doing business in China,” she says.
As well as watching those groups that are shifting their production in this way, she is interested in companies in Australia in the natural resources sphere. However, she warns about core hurdles in some Asian economies. “I always have a problem with Malaysia, as corporate governance issues and linkages of different companies make it too hard to predict,” says Ms Thio, who nevertheless may be tempted by several exceptions, including chemical company Petronas and rubber glove manufacturer Supermax, if valuations in Kuala Lumpur become more attractive.
Recently she has been doing more share-shopping in Indonesian and Thai markets. “Indonesia is not cheap. It is hard to find companies that are reasonable in terms of valuation, yet offer you a rate of growth where you feel comfortable with the risk,” says Ms Thio, who has so far purchased stock in two Jakarta-listed groups.
Thailand, she says, offers the most attractive valuations “for good solid companies with a track record” in the ASEAN region. Moreover the country shows strong domestic demand, “despite the politics”.
