MIDAS SHARE TIPS: Emerging market float is tempting
MIDAS STOCK TIPS: Investors remain wary of faraway places, but emerging markets float with Ashoka WhiteOak is tempting
Chile, China and Egypt may seem to have little in common. But in financial circles, they are all “emerging markets.” The name is applied to 24 countries, from Taiwan and Thailand to Poland and Peru.
At the turn of the century, these countries contributed just over 20 percent to global economic growth. Today they account for almost half. Most are growing faster than their Western counterparts, inflation is lower and national balance sheets are stronger.
Yet investors remain wary of these far-flung places, often causing their stocks to be overlooked and undervalued. Ashoka WhiteOak Emerging Markets Trust (AWEM) plans to capitalize on this decoupling, with a £100m IPO at £1 per share.
Applications can be made through Friday morning via AJ Bell and Interactive Investor, among others. The stock should pay off.
AWEM is run by Prashant Khemka, who founded Ashoka India Equity Investment Trust in 2018. The shares were recommended by Midas at the time and have risen from £1 to £1.78 as Khemka and his team have looked for companies across India with robust long-term prospects and attractive share prices.
Growing: Chile, China and Egypt (pictured) may seem to have little in common, but in financial circles they are all “emerging markets”
Performance has been dampened lately, but the outlook is good and Khemka now intends to take a similar approach in the emerging markets universe. With the help of a 40-strong team of researchers, the Trust will conduct a thorough analysis of potential investments, with a particular focus on how companies are managed and the environment in which they operate.
Khemka favors investing in companies from democratic countries, where the rule of law is more reliable. The trust will also invest in companies that derive most of their revenue from emerging markets, such as luxury goods giants Hermes and LVMH – based in France but hugely popular with affluent Chinese consumers. Other investments include Taiwanese chipmaker TSMC, Brazilian chemical chain Raia Drogasil and Polish logistics group InPost.
In total, Khemka expects to invest in at least 100 companies, minimizing exposure to any one company or country. He and other members of the group are subscribing to shares in the IPO and the fees are based on outperformance over three years.
Midas verdict: Investing in emerging markets can be risky, but Khemka has proven his track record and has decades of industry experience. This is also the first investment trust to enter the London market since December 2021. At £1 per share, Ashoka WhiteOak Emerging Markets Trust is well worth checking out.
To trade on: Main market ticker: AWESOME Contact: awemtrust.com or 020 3893 1011