A JP Morgan Asset Management fund that has more than doubled in the past year is making the booming initial public offering market for Asia’s technology companies its top investment priority in 2021.
Oliver Cox, who manages the JPMorgan Pacific Technology Fund, sees listings of Asian technology companies this year providing an opportunity for early investment in the “multi-year winners of the future.” His team is closely watching potential deals including JD Logistics Inc. and ByteDance Ltd.’s short-video app Douyin in Hong Kong, and Flipkart Online Services in India.
The fund manager sees enterprise software, e-commerce, leading chipmakers and gaming stocks as the four “best themes” in the tech space over the next five to 10 years. Cox’s $1.1 billion fund is up 16% so far this year, beating the MSCI Asia Pacific Index by seven percentage points.
Investing in Asia tech IPOs has been a rewarding strategy amid the pandemic tailwinds of massive stimulus, a surge in retail investing and a focus on stay-at-home plays. JD Health International Inc. has more than doubled since it listed in Hong Kong in early December, while Douyin rival Kuaishou Technology has more than tripled since listing just last Friday.
The largest holding in Cox’s fund is Dada Nexus Ltd., an operator of crowd-sourced delivery platforms in China backed by JD.Com, which has gained 178% since listing last June. Its other top holdings include Meituan as well as more traditional tech favorites Taiwan Semiconductor Manufacturing Co. and Nintendo Co.
Covid-19 has led to dramatic structural changes in consumer behavior patterns, with a greater number of people and companies embracing new trends in cloud technology and e-commerce, Cox said. He isn’t concerned about any near-term rotation into cyclical stocks after the big recent gains in tech shares.
“I think too many people are focusing on the extent that ‘ah this is pull-forward demand’ or ‘it’s a one-year trend’,” he said. Longer term, the adoption of digital platforms “will be much more powerful. We are going to see it manifested in earnings trends this year and next year.”
This article was provided by Bloomberg News.