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Asia Tea Time - Cup 8 ☕

We’re spilling the tea on all things Asian investors need to know.

Market updates on key macro events throughout the region, Asian and US company spotlights, and general money tips. All in one place. This is Asia Tea Time.

I'm including a new section; “Tim’s money tip of the week” to add more insights for readers on their personal finance journey.

In case you missed it, earlier this week I wrote about why you should buy Singaporean stocks and why buying bigger Singapore REITs is a smart move.

Macro in Asia

India’s population to overtake China’s by the middle of 2023

India is forecast to overtake China to become the world’s most populous nation by the middle of this year.

According to UN data projections, India’s population of 1.4286 billion will be slightly higher than China’s 1.4257 billion by the summer of 2023.

Why it's happening

  • We know that both India and China have mad numbers of people but in 2022 the latter recorded the first drop in its population since 1961.
  • It turns out that the whole “you can only have one child” policy from the 1980s wasn’t great for the country’s long-term population growth. Who would have guessed?
  • Meanwhile the median age of India’s population is 28 years – meaning it’s over 10 years younger than the Chinese median age of 39. Is 30 the new 40?

Why it matters

  • China’s rapidly-ageing population has Chinese policymakers freaking out. They only started allowing couples to officially have two children in 2015 (a little late, no?) and then three children from 2021.
  • But in 2020 in China, the average number of births per woman was just 1.6 – that’s well below the 2.1 replacement rate needed to keep the population growing.
  • Other Asian countries with low fertility rates – like Singapore, South Korea, and Japan – have been trying to get women to have more babies (with generous packages) yet the issue with the whole procreation thing is that it turns out it’s actually pretty pricey.
  • As for India, let me hit you with some stats. People under 25 account for 40% of its population while the share of Indians 65 and older won’t hit 20% until at least 2063.

What's next?

  • Many investors will be watching growth numbers coming out of India in the next couple of months as recent heat waves in the country have caused chaos. Climate change, people!

Tim's Take

With China’s working population shrinking, one of the biggest unintended consequences has been rising labour costs, or wages.

China’s manufacturing sector has seen its average hourly pay more than triple in the past decade.

Anecdotally, it’s no surprise then to read about more manufacturing moving out of China and into the likes of Vietnam, Thailand, and India.

The timing of this India/China population crossover and news of the opening of Apple’s (NASDAQ: AAPL) first official store in Mumbai, India was almost too coincidental.

For investors, with rising wages and a shrinking workforce in China (that’s still undoubtedly the “world’s factory”), we should all be concerned about potentially higher production costs for firms.The bottom line? Higher inflation – at least than what we’ve been used to for the past decade – could be something that’s here to stay.

Company spotlights

Anta Sports shares drop over 10% on share placement

ANTA Sports Products (SEHK: 2020), one of China’s largest sportswear brands, saw its shares end the week down 11%.

That was mainly due to an additional share sale placement that raised HK$11.8 billion (US$1.5 billion) in Hong Kong. Shares in the top-up placement were priced at an 8.8% discount to Monday’s close.

Why's it news?

  • Nobody likes dilution, in their drinks or in their shares. And that’s exactly what ANTA Sports management served up to shareholders.
  • Typically, dilution leads to share price falls as you own less of the company afterwards. That’s because shareholders get antsy when a company raises substantial coin for “general working capital” – it usually isn’t a great sign.

Why it matters

  • There seem to be a few fundraising exercises in recent months in Hong Kong. Some other flex capital raises include Link REIT (SEHK: 823) – Asia’s largest REIT – which raised HK$18.8 billion in a rights issue to fund the acquisition of a Singapore property.
  • In ANTA’s case, it appears that the company’s fundamentals are sound but that it will repay some of its debt and to add to its net cash position.

What's next?

  • Anta reported its first-quarter update on 12 April, noting some decent growth in its core business. Watch out for any numbers on China’s consumer.

Tim's Take

ANTA Sports, along with Li Ning Co (SEHK: 2331), are the two big (local) brands in China taking on the traditional powerhouses of Nike (NYSE: NKE) and Adidas.

Many consumers in China are now turning off Western brands.

There are a couple of reasons for that. First, local Chinese apparel brands are now as good (if not better) than their Western counterparts in terms of quality and design.

Second, geopolitical tensions between the US and China are allowing Chinese brands to take advantage of any nationalistic sentiment among the population, providing them with the incentive to “buy local”.

The beauty of the sportswear giants is what they’re selling aligns perfectly with President Xi’s wishes – homegrown, mass market consumption but in the healthy living segment.Over the past five years, the two brands have also managed to grow their direct-to-consumer (DTC) models in a vastly profitable way, emulating what Nike has achieved with its own global stores.It’s therefore no surprise to see that shares of both ANTA (+130%) and Li Ning (+576%) have outperformed those of Nike (+79%) over that timeframe.

Tim’s Money Tip of the Week

Do you find budgeting a pain? Too many credit cards and various statement dates to keep track of? It’s not the most exhilarating topic I know, so I won’t go into the weeds.

But there’s actually a really simple hack to organising the whole process better, at least on the outgoings part.

Just call your card company (or bank) and get them to start each credit card statement date at the beginning of the calendar month.

That way, you know exactly how much you’re spending on different cards during each month.

It will make budgeting that much less excruciating and will give you a better overview of what you’re actually spending in a month.

Story of the Week

Nabbing long-haul business class and first-class tickets on Japan’s All Nippon Airways (ANA) can apparently cost you as little as US$300.

At least that’s what Hong Kong’s Herman Yip found when he, along with others, discovered as a bug on ANA’s website (mainly due to currency conversion) listed these flights at less than 20 times their face value.

That allowed Herman to purchase 25 tickets for friends and family – I guess you can always check whether they’re actually free to travel later.

Even better, the flights were listed incorrectly on its Vietnam website (how random). Obviously, news like this spreads like wildfire on online travel forums such as FlyerTalk.

With news of travel demand remaining elevated – and airline prices still sky-high – it’s certainly worth booking flights well ahead of time if you can.