Value Investing in Asia

Chapter 2Key Developments in Asia

History does not repeat itself, but it rhymes.

— Mark Twain

As the largest continent, with over four billion people and a very diverse demographic, it is no surprise that Asia presents many opportunities. In September 2014, the market capitalisation of roughly 24,000 companies listed in the Asia-Pacific region was around US$20 trillion, not too far from the Americas' US$30 trillion.¹ Conventional wisdom has it that a diversified portfolio requires about 30 holdings.² Asian investors have just as many choices and opportunities available to them as US investors do.

What Is in Asia?

With 50 countries,³ comprising a diversity of cultures, economies and even languages, we find it impossible to view Asia as one homogenous entity. For this book, we will focus mainly on the markets within the Greater China and Southeast Asia region. Here are the key Asian exchanges on our radar.

Hong Kong Stock Exchange

Owned by Hong Kong Stock Exchange Group, HKEX is Asia's 2nd largest stock exchange (2014). The HKEX Group is also the owner of the London Metal Exchange, one of the world's largest industrial metal trading platforms. In 2014, there were 1,752 companies listed on HKEX, with total market capitalisation of over HK$25 trillion.⁴ Blue-chip companies within the Hang Seng Index include CK Hutchison Holdings Limited, HSBC Holding PLC (Hong Kong), Swire Group's Swire Pacific Limited, China National Offshore Oil Corporation's Limited and the technology ...