Jefferies’s Asia Ex-Japan Portfolio’s latest rebalancing showcases renewed confidence in India’s banking landscape, marking a strategic pivot towards the nation’s financial sector. The portfolio restructuring, emphasising private banking and industrial automation, signals growing institutional conviction in India’s economic fundamentals and manufacturing capabilities within the broader Asian market context.
What is the Asia-ex-Japan long-only portfolio?
Asia-ex-Japan long-only portfolios focus on investing in stocks from Asian countries, excluding Japan. These portfolios aim at emerging markets with high growth potential due to rapid economic development, rising consumer demand, and technological advancements.
Key Characteristics:
- Investment Focus: Invest in companies in Asian emerging markets like China, India, South Korea, and Southeast Asia. Japan is excluded as it’s considered a developed economy.
- Growth Potential: It attracts investors seeking high returns from fast-growing economies, an expanding middle class, and increasing exports in sectors such as technology and commodities.
- Portfolio Composition: Typically diverse, including companies like HDFC Bank, Siemens, Zomato, and infrastructure firms like Larsen & Toubro.
- Management Style: Often actively managed, focusing on high-quality companies with sustainable growth prospects, using fundamental analysis and proprietary research.
What changes are expected?
Global investment firm Jefferies will bring HDFC Bank back into its Asia ex-Japan long-only portfolio with a 4% weightage as part of its yearend portfolio adjustments. These will be paid off by reducing 1 percentage point each in Macrotech Developers, Larsen & Toubro, ICICI Bank, and Axis Bank, according to the latest Greed and Fear report.
Jefferies will also introduce a 4% allocation to Siemens by removing the investment in Samsung Electronics Pref and shaving the investment in SK Hynix by 1 percentage point from the Asia portfolio.
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Company profile of HDFC Bank & Siemens
HDFC Bank, founded in January 1995 and headquartered in Mumbai, merged with HDFC Limited in April 2022, enhancing its housing loan services. By September 2024, it had 9,092 branches and 20,993 ATMs across 4,088 cities and towns, including rural areas. Siemens India, a subsidiary of Siemens AG, operates in electrification, automation, and digitalisation across various industries. Despite recent stock price drops, it remains a strategic player. Both are pivotal to the Indian economy, showing adaptability and strategic growth.
Examples Other of Asia ex-Japan Funds:
- Morgan Stanley Asia Opportunity Fund: Targets high-growth companies in the region and has performed well against its benchmark.
- Fidelity Emerging Asia Fund: Primarily invests in Asian emerging markets, especially China.
- RBC Asia ExJapan Equity Strategy: Seeks longterm capital appreciation by investing in high-quality companies with disciplined risk management and thorough due diligence.
Written By Fazal Ul Vahab C H
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