Portfolio Briefing –
– Paul Espinosa provides examples of two categories of Value component stocks that led performance of the Growth and Income Fund in the quarter. He also describes the decision-making process behind the Fund’s increased exposure to the Value component in recent quarters.
Portfolio BriefingPortfolio Briefing –
– Paul Espinosa attributes the Value Fund’s performance to holdings that were directly impacted by the pandemic but proved resilient, and rose when the market re-assessed their risks. Holdings that increased due to stock-specific reasons, such as Pacific Basin and Moneta Money Bank, also contributed to performance.
Portfolio BriefingNavigating the Complexities of SOEs in Emerging Markets
– Nicholas Borst, Paul Espinosa, and Andrew Foster explain that when evaluating emerging market companies, state control matters, more so than state ownership. Andrew outlines “exception” cases in which it can make sense to invest alongside a state control party, but explains that he wants to see state control decline over time, as more commercially oriented actors take greater control.
MoreSOE Reform in China – Implications for Policymakers and Investors
– A rules-based and transparent approach to managing state-owned enterprises is in China's economic interest and will provide clarity for foreign investors.
SOE Reform in China – Implications for Policymakers and InvestorsPortfolio Review –
– Andrew Foster reports that a rapid rise in consensus expectations for EM corporate profits lifted stocks higher in the quarter. He suggests that the market rewarded some Growth and Income Fund holdings for producing durable earnings growth amid the pandemic. Lastly, in light of the uncertain path to “normalization” in EM, high prices on stocks generally, and a pronounced bubble in large swathes (but not all) of China, Andrew advises investors to tread cautiously in the EM asset class.
Portfolio ReviewPortfolio Review –
– Paul Espinosa explains that Value Fund performance was led by companies that had sold off earlier in 2020 due to the pandemic, while EM benchmark performance was led by technology companies headquartered in China, Taiwan, and South Korea. Paul also introduces a new Fund holding, a Southeast Asia-focused conglomerate operating in the real estate, auto, and food retail industries.
Portfolio ReviewPrevailing Winds
Learn MoreRebalancing the U.S.-China Economic Relationship
– In an Asia Society Conference panel titled Rebalancing the U.S.-China Economic Relationship: Trade, Investment, and Technology, Nicholas Borst explains how the increase in holdings of Chinese securities by U.S. investors has emerged as a major source of conflict in the U.S.-China economic relationship.
Rebalancing the U.S.-China Economic RelationshipHow Exposed Are U.S. Investors to China?
– U.S. investors have invested more in China than the official statistics indicate, but remain less important as a financing source for Chinese companies than policymakers and the media may imagine.
How Exposed Are U.S. Investors to China?Tracking China’s Foreign Debt
– China leads the emerging markets in foreign debt, but a closer analysis reveals that China’s foreign borrowing is less risky than it appears, and is manageable relative to the size of the economy.
Tracking China’s Foreign DebtNews and Commentary
Emerging Markets Briefing
– Seafarer addresses key questions about emerging markets investing and how U.S. investors can integrate the asset class into long-term portfolios.
MoreMoney Life – Interview with Andrew Foster
– In an interview with Money Life’s Chuck Jaffe, Andrew Foster compares three countries that dominate EM – China, Taiwan, and South Korea – with other EM countries in terms of valuations and the path to pandemic-related “normalization.” He also discusses China’s evolving role within the EM asset class. Listen
MoreLetter to Shareholders
– Kate Jaquet discusses how Seafarer’s team has adapted to remote work this year. She describes two risks in China that she is closely monitoring: indebted property developers and the troubled banking sector.
Letter to ShareholdersChina’s Indebted Residential Property Development Sector
– As the Chinese economy faces headwinds on multiple fronts, its residential property sector – rife with opaque financing and cross-currency debt – presents risks to Chinese authorities.
MoreA Tale of Two Indices – Discussion with Steph Gan
– Steph Gan speaks with Andrew Foster about her commentary A Tale of Two Indices, which examines how countries and industries that represent the next leg of the developing world’s emergence are likely to be under-represented in leading emerging market indices.
MoreFund Resources
Field Notes
Explore Our MapPenang
Manufacturers Limited by Customer Concentration
– The small Malaysian state of Penang has a skilled workforce, reliable infrastructure, and a long history in the global technology supply chain. One thing that many Penang-based contract manufacturers don’t have is customer diversification.
PenangBeijing
Technology Reigns
– Beijing’s technology companies are focused on smart city initiatives, big data, and artificial intelligence.
MoreDelhi
Smoked Out
– Hazardous air pollution in Delhi exposes the politics of India’s environmental ambitions.
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