SEOUL • A Singapore-based hedge fund is betting on continued recovery in Asian technology stocks, as it expects consumer demand held back by the coronavirus pandemic will soon rebound.
Timefolio Asset Management SG Pte Ltd’s Asia equity long-short fund has gained 27% so far this year, with tech stocks contributing the bulk of the returns, according to the company. The US$100 million (RM430 million) asset manager is a shareholder in companies including Japanese photomask inspection system developer Lasertec Corp, which rallied 107%, and MediaTek Inc, a Taiwan fabless semiconductor firm, that jumped 42%.
“We believe Covid-19 merely created behaviour change that pushed out the end demand to the second half, when we will see a steeper recovery as we are already seeing strong recovery in demand for semiconductors used for consumer brands such as Apple Inc’s products,” Narci Chang, a Taiwan-based fund manager at the firm, said in a phone interview.
Chang expects Asian and US tech names to see more beats than misses in the second-quarter (2Q) earnings season. He is particularly bullish on sectors related to semiconductor re-stocking and extreme ultraviolet lithography capital expenditures, as well as electric vehicles (EVs). In Korea, the fund is also a long-term holder for LG Chem Ltd, a maker of battery for EV that climbed 72% this year.
During the global sell-off in March, the fund added Lasertec and JD.com Inc, a Chinese e-commerce company with its US-listed shares rising 86% this year, as well as NetEase Inc, a Chinese Internet company that gained 58% in the US, the firm said.
Although the fund is not holding a “meaningful position” in stocks in the memory-chip sector, it will join the 2Q earnings conference call of Samsung Electronics Co Ltd, expected at end-July, for any comments on the sector’s outlook.
The fund is also closely monitoring the relationship between South Korea and China, in anticipation that improving ties may lead to a revival of China’s demand for Korean content and products. Relations between the two countries soured amid a missile spat in 2016, which had led China to put a travel ban to Korea and restrictions on consumption of Korean content. The fund is holding Studio Dragon Corp, a Korean drama producer that has risen 12% this year.
“We are seeing evidence of two countries cooperating more in various sectors and reports on Trip. com Group Ltd selling Korea tour packages cements our view here,” said Jae Lee, a fund manager at the firm. — Bloomberg