Best Asian Investment Spots For Your $100K

If you're looking to invest $100,000 in Asia, you'll want to consider a range of options across the region's diverse markets. While China-related investment tips previously dominated recommendations, the current economic turmoil and zero-Covid policies in the world's second-largest economy have made finding robust returns more challenging. However, Asia remains the world's fastest-growing region, and there are still plenty of opportunities for investors to explore.

Taiwanese tech companies

Taiwan is a stable industrial economy, with a high-tech industry that plays a key role in the global economy. It is often referred to as one of the Four Asian Tigers, alongside Hong Kong, Singapore and South Korea.

Taiwan is a leader in the semiconductor field, and there are several Taiwanese tech companies that are worth considering for investment. Here are some of the largest and most notable Taiwanese tech companies:

Taiwan Semiconductor Manufacturing Company (TSMC)

TSMC is the world's largest dedicated independent semiconductor foundry. It is a pioneer in the industry, fabricating integrated circuits and offering a pure-play foundry model, where it does not have any in-house design capabilities. Many semiconductor companies, including Apple Inc. and Nvidia, outsource the manufacturing of their components to TSMC.

Hon Hai Precision Industry Co. (Foxconn)

Foxconn is the world's largest electronics manufacturer, with subsidiaries including Sharp Corporation and Smart Technologies. It is a global leader in hardware and software development, manufacturing products such as smartphones and video game consoles. Foxconn also has a notable presence in the AI, semiconductor, and new-generation technology markets.

United Microelectronics Corp. (UMC)

UMC is one of the oldest Taiwanese semiconductor companies, founded in 1980. It has a global presence, with offices in the US, Europe, China, Japan, Korea, and Singapore. UMC offers a range of advanced manufacturing processes, serving the global electronics industry.

MediaTek

MediaTek is the world's fourth-largest fabless semiconductor manufacturer. The company manufactures semiconductors for smartphones, domestic appliances, and entertainment systems. MediaTek's products power over two billion devices globally, including one in three cell phones worldwide. In 2020, the company overtook US rival Qualcomm as the largest vendor of smartphone chipsets.

ASE Technology Holding Co.

ASE Technology Holding Co. is a semiconductor assembly company headquartered in Kaohsiung, Taiwan. The company specializes in semiconductor assembly, testing, and packaging. They are pioneers of the heterogeneous integration (HI) process, which integrates separately manufactured components into high-performance electronic applications.

Other Notable Mentions:

• ZillTek Technology
• Elite Material
• Sinbon Electronics
• Parade Technologies
• Win Semiconductors
• E Ink Holdings
• Novatek Microelectronics
• Powerchip Semiconductor Manufacturing
• Transcend Information

When investing in Taiwanese tech companies, it is important to consider the broader economic and geopolitical context, as well as conducting thorough research into each company's financials, business model, and growth prospects.

Chinese convertible bonds

Convertible bonds in China have become increasingly popular among both Chinese issuers and foreign investors. They are considered an interesting alternative to China stocks due to their unique features, such as low conversion premiums, conversion price annual resets, and commercial bank-guaranteed payments.

Advantages of Chinese Convertible Bonds

Low Conversion Premium

The low conversion premium in Chinese convertible bonds, typically set at about 0.1%, means that the stock price does not need to appreciate much before it becomes economically viable to convert. This is in contrast to US issuers, who often seek high conversion premiums to limit dilution.

Conversion Price Annual Reset

Many convertible bond issues in China allow issuers to reset the conversion price downward annually if the share price falls significantly. This feature, similar to that of reset convertible bonds in Japan in the mid-1990s, offers investors more shares if the stock price declines, helping to keep the bond's conversion value at par.

Investor-Friendly Features

Disadvantages and Challenges of Chinese Convertible Bonds

Complexity and Default Risk

Volatility

Issuing convertible bonds can affect the volatility of the underlying stock return, and it can be difficult to estimate the volatility of the stock after issuing the convertible bond.

Regulatory and Approval Process

In China, equity offerings are subject to a complex and time-consuming regulatory approval process, whereas convertible bonds are treated more like debt from a regulatory standpoint, making them easier for Chinese companies to launch.

Cryptocurrency

Regulatory Landscape:

On the other hand, countries like China and India have taken a more restrictive approach. China has imposed a blanket ban on all crypto-related activities, including mining, trading, and issuing cryptocurrency. India has imposed harsh crypto laws and a flat 30% tax on profits from crypto trading or investments.

Other countries, like Indonesia, recognize cryptocurrencies as trading commodities rather than a means of payment, and have implemented specific regulations and requirements for their use.

Regional Opportunities:

When considering where to invest in cryptocurrency in Asia, it's important to look at the unique ecosystems that have developed in different countries:

• South Korea: South Korea has a unique crypto ecosystem, and everyday traders are actively involved in the market.
• Philippines: Cryptocurrencies have become a popular and cheap way to send money into and out of the country, especially for the unbanked population.
• Hong Kong: Hong Kong has recently started granting crypto licenses to digital asset trading platforms, enabling licensed exchanges to offer retail trading services.
• Australia: Australia plans to introduce cryptocurrency exchange-traded funds (ETFs) to its largest stock market, creating potential investment opportunities.
• Singapore: Singapore is racing to become a hub for digital currencies and has a favourable regulatory environment for crypto trading and possession.

Specific Investment Options:

When investing in cryptocurrency, it's important to diversify your portfolio and consider a range of options:

• Ether (ETH): John Toro, head of trading at Independent Reserve, recommends investing in Ether due to its recent shift to a more eco-friendly proof-of-stake system. He suggests purchasing lots of 32 Ether, the minimum amount required to become a "validator" and take advantage of staking returns.
• NFTs: Non-fungible tokens (NFTs) have gained significant traction in the crypto space. Melody He, deputy chief executive officer of CSOP Asset Management, suggests looking into Web 3.0 NFTs that provide unique membership or impact, such as the CyberKongz and Remarkable Women NFT collections.
• Crypto Exchange-Traded Funds (ETFs): With the growing popularity of cryptocurrencies, crypto ETFs have emerged as an investment option. These ETFs provide exposure to cryptocurrencies and related industries, such as blockchain technology. Examples include the Global X 21Shares Ethereum ETF (EETH AU) and the Global X China Robotics & AI ETF (9807 HK).

Risk Management:

It is crucial to approach cryptocurrency investments with caution and a thorough understanding of the risks involved. Cryptocurrencies are highly volatile, and their values can fluctuate significantly. Additionally, the regulatory landscape in Asia is constantly evolving, and changes in government policies can impact the market.

It is essential to conduct thorough research, diversify your investments, and only invest what you can afford to lose. Remember that the cryptocurrency market is subject to high risks, and there are no guarantees of returns.

In conclusion, investing $100,000 in cryptocurrency in Asia offers both opportunities and challenges. By understanding the regulatory landscape, exploring regional ecosystems, diversifying your portfolio, and carefully managing risk, you can make informed decisions about allocating your funds in this dynamic and rapidly evolving market.

Telecommunications firms

Andrew Chow, executive director and investment counsellor at Rockpool Capital, recommends investing in high-dividend companies with steady businesses, such as telecommunications firms, which offer stable and consistent returns. Telecommunications is one of the most stable businesses in China, as most citizens cannot live without data and connectivity. It is also resilient to events such as Covid-19, as people will continue to require data and connectivity regardless of lockdowns.

Some notable telecommunications companies in Asia include:

• Philippine Long Distance Telephone (ePLDT)
• Vodafone Idea
• Singtel
• Bharti Airtel Services
• Huawei Digital Power Technologies Co
• FPT Corporation
• JioFiber
• PTCL - Pakistan Telecommunication

When investing in Asia, it is important to pay close attention to corporate governance and focus on companies that are committed to improving and maintaining good corporate governance. It is also important to ensure that you have a well-diversified portfolio across asset classes, investment styles, and geographies.

Chinese equities

China's economy is the biggest and fastest-growing in the region, and its success in containing the coronavirus means it has been able to operate much more normally than the rest of the world. However, there has been ongoing economic turmoil in China, with accelerating inflation, interest rate hikes, and volatile markets.

Despite this, there are still opportunities for investors in the region. Laura Lui, partner and co-chief investment officer at Premia Partners, is positive about Chinese equities, citing the decisive shift of the People's Bank of China's monetary policy stance to easing, and the pause in last year's regulatory clampdown. Lui suggests that investors look at companies in sectors such as semiconductors, new materials, the green economy, and biotech, which will benefit from policy tailwinds and provide good diversification for investors with concentrated exposure to Asia's tech sector.

Xiaolin Chen, head of international at KraneShares, agrees that Chinese equities, particularly China A-Share equities, tend to be more defensive when global geopolitical risk is heightened. Chen points out that Chinese companies often make most of their money domestically, with single-digit overseas revenue exposure, and that foreign ownership is relatively low at around 4.5%. Additionally, Chen notes that China's internet companies are currently trading at attractive valuations compared to their US counterparts, and have historically outperformed the Nasdaq, S&P 500, and the US Growth Index during Federal Reserve rate-hike cycles.

However, it is important to consider the risks associated with investing in Chinese equities. Foreign investors have faced challenges in recent years, including reduced access to live data on share trades and difficulties cashing out from China. There has also been a years-long fall in the Chinese market, and some global fund managers believe that government efforts to stabilise the market have been too little, too late.

When investing in Chinese equities, it is crucial to do your own research, carefully evaluate the risks, and consider seeking advice from a financial professional.

Frequently asked questions