Patricia Perez-Coutts, portfolio manager, PenderFund Capital Management

FOCUS: Emerging and global markets 


Despite the recent macro setbacks in both Europe and North America, we see several important positive macroeconomic signals in various emerging market (EM) countries that we believe provide a less volatile outlook for the next six months.

  • Inflation - we have seen for many months already, either a stabilization or declining trend depending on the country. For instance, China has in the last few days reported inflation levels that have continued receding. In Brazil, inflation overall is largely contained, though remains on the higher side. As we have commented in the past, EM central banks, for the most part, had been raising interest rates far ahead of developed economies. This led us to anticipate that the EM rate cycle was approaching its peak.
  • Growth - there is no doubt that expected lower global growth impacts EM growth expectations. Importantly, with oil prices declining substantially from recent highs, the erosion of growth can now be seen as being more benign, given that many EM countries are net importers. With fiscal and current balances pretty much stable and in check, we see many EM countries having proper resources to fend off macro externalities, while also stimulating spending in their own respective countries.

All in all, we see the outlook for the various EM economies in which the mandate participates with a more constructive lens.

From a bottom-up perspective, the picture looks a lot more favourable. As active managers, we do not depend on what the EM benchmark prescribes. Therefore, we have been actively investing in EM companies whose fundamentals have actually been doing well during these volatile times. We have seen quarterly earnings reports that have largely been above expectations and whose fundamental outlooks speak strongly for the mid and long-term.

The precedent of EM markets outperforming developed markets over the long run and the several important episodes that have meant macro, market and micro improvements.

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Patricia Perez-Coutts' Top Picks

Patricia Perez-Coutts, portfolio manager at PenderFund Capital Management, her top picks: Sociedad Quimica y Minera de Chile, Taiwan Semiconductor, and NetEase.

Sociedad Quimica y Minera de Chile (SQM NYSE)

Average price per share paid: US$86.33

We like that SQM is the lowest-cost producer of lithium and specialty fertilizers. Its products are also mined in an environmentally-friendly manner versus other producers. Importantly, the demand outlook and prices for its several products remain positive, given car makers’ strong electric vehicle capex plans. The company is an efficient operator and has carefully planned its upcoming capacity expansions. Operating margins are sustainable at 47 per cent.

Taiwan Semiconductor (TSM NYSE)

Average price per share paid: NT$494.67 

We like the moat that TSMC possesses with critical and proprietary knowledge in the design of 3-5 nanometer semiconductor chips. The demand for chips is expected to continue growing significantly given the greater diversification of uses and industries such as automobiles, cloud computing, EVs, internet of things, AI, 5G and acceleration of the digital transformation. Sustainable return on equities at 22 per cent.


Average price per share paid: HK$145.39 

We like the strong track record in developing PC and mobile games in various genres, its capability to achieve a long life cycle for existing PC and mobile game titles and its capability to maintain a balance of monetization in existing games and spending in new games to keep a steady margin profile. Continued growth in both China and internationally. Netease is likely to become a major content provider for the metaverse.