Investors should take a long-term approach to investing and focus on fundamental factors that will drive the returns of companies, Shou-Pin Choo, portfolio manager for Asian equities at UBS AM, told FSA.
At times, market volatility may not be such a bad thing for investors, as it gives them a chance to strengthen their positions in companies they favour and re-calibrate their portfolios for outperformance over a long investment horizon, he said.
Choo, who is also a technology analyst, highlighted IT, consumer discretionary and healthcare as sectors where strong growth potential can be found.
“Technology is always evolving and hence the only constant is change. Trends that are evolving include augmented reality/virtual reality), artificial intelligence, and advanced driver assisted systems,” he said.
“As the world rolls out 5G networks, there will be more applications emerging to take advantage of systems that promise faster speed, wider bandwidth and lower latency.”
To drive these changes, there would be higher consumption of related components, especially semiconductors. Technological advancement and breakthroughs in manufacturing processes as well as related capital expenditure in manufacturing capacities will also have significant impact on the semiconductor industry, he said.
The Covid-19 pandemic and rising Sino-US tensions have brought into sharper focus the importance of supply chains, and have prompted measures to ensure a greater degree of semiconductor self-sufficiency for both China and the US, according to Choo.
He believes that semiconductor firms in Asia are not only the most numerous, but also the best. “There are many good investment candidates, especially among those that are going to help build China’s semiconductor industry to replace US imports,” said Choo.
Choo has a tilt towards mid- and small-cap stocks, because they have a “long runway for growth and are more undiscovered by the wider market”.
“We form a disciplined long-term assessment of the companies through bottom-up research, and that makes it easier to stay calm during periods of market volatility and portfolio underperformance,” Choo told FSA.