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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 Pvt'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 $100 million asset manager is 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 behavior 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's products,” Narci Chang, a Taiwan-based fund manager at the firm, said in a phone interview.
Chang expects Asian and U.S. tech names to see more beats than misses in the second-quarter earnings season. He is particularly bullish on sectors related to semiconductor re-stocking and EUV (Extreme Ultraviolet Lithography) capex as well as electric vehicles. In Korea, the fund is also a long-term holder for LG Chem Ltd., a maker of battery for electric vehicle that climbed 72% this year.
During the global selloff in March, the fund added Lasertec and JD.com, a Chinese e-commerce company with its U.S.-listed shares rising 86% this year, as well as NetEase Inc., a Chinese internet company that gained 58% in the U.S., the firm said.
Although the fund is not holding a “meaningful position” in stocks in the memory-chip sector, it will join the second-quarter earnings conference call of Samsung Electronics Co., expected at end-July, for any comments on the sector's outlook.
Read more: Samsung's Profit Beat May Precede Slowing Chip Sales Growth
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 selling Korea tour packages cements our view here,” said Jae Lee, a fund manager at the firm.
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