Asset manager cautious about Apple’s suppliers - Taipei Times
Mon, Apr 16, 2018 - Page 15 News List

Asset manager cautious about Apple’s suppliers

Bloomberg

After doing well out of Apple Inc suppliers for several years, a top fund manager says it is time to take money off the table.

Geoffrey Wong (黃義旗), head of emerging markets and Asia-Pacific equities at UBS Asset Management in Singapore, has reduced his holdings of the suppliers as he doubts consumer demand for high-end mobile phones will keep rising.

Wong has sold out of Largan Precision Co (大立光), a stock which he held since at least 2011.

The handset lens maker’s shares soared 610 percent in Taipei in the six years through last year. This year, they are down 14 percent.

“We are a bit more cautious,” said Wong, who oversees a team that manages about US$30 billion, including one of the best-performing emerging market equities funds.

“Have we reached a price point where consumers are fighting back and saying I’m not going to pay $1,000 for a phone,” he said.

Consumers are also buying cheaper phones with simpler features, Wong said.

Apple reported lower-than-expected handset sales for the fourth quarter of last year, after the launch of the pricey flagship iPhone X.

Only Xiaomi Corp (小米) and Motorola, which produce less expensive models, shipped more smartphones during the period, according to market researcher IHS Markit Ltd.

While shares of Taiwanese component makers have largely fallen in the past year, Chinese producers such as Sunny Optical Technology Group Co (舜宇光學) and AAC Technologies Holdings Inc (瑞聲科技) are among the best performing stocks in Hong Kong, as investors bet on growing demand in China.

That is not tempting Wong though, who said his portfolio now has very little exposure to phone makers.

Wong is bullish on Asian memory chipmakers, such as Samsung Electronics Co and Taiwan Semiconductor Manufacturing Co (台積電), as the development of artificial intelligence bodes well for the sector in the next decade.

He is also holding on to Tencent Holdings Ltd (騰訊) and Alibaba Group Holding Ltd (阿里巴巴) despite recent volatility, encouraged by their expansion into finance and services.

Banks in emerging markets are also a good investment, Wong said.

Non-performing loans are starting to come down as corporate profits improve, while top companies are likely to borrow more as they increase capital expenditure in the coming three years, he said.

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