Opportunity in Asia
T. Rowe Price first established its presence in the Asia-Pac region in 1982 with the opening of our Tokyo office.
We have since shown our long-term commitment to the region and to our Asia-Pac business partners by carefully expanding our locally based research capabilities and investment offering, with teams on the ground in Tokyo, Hong Kong, Singapore, and Sydney.
Asia-Pac is a highly diversified marketplace. It includes developing and emerging markets that are ‘opening up’ to global influences and where the spending power of Asia’s middle classes continues to grow. It is also home to fully mature markets, such as Australia, where companies often rely on offshore earnings, and where successful investing depends on understanding how global markets interact.
We believe that a thorough understanding of these opportunities can provide the insights to maximize the potential of long-term investments. But how and why is the T. Rowe Price approach to identifying potential investments so distinctive?
Multiple perspectives
At T. Rowe Price, we look at opportunities from a number of perspectives in order to see the full potential, as well as any pitfalls, which others might miss.
This approach to active management involves constantly sharing views between experts from diverse disciplines, different geographic regions and with portfolio managers. Macro-level views are also contrasted with information gathered on the ground. In fact, our equity and credit analysts often travel together to visit the management of jointly-covered companies to share in each others’ insights and understanding.
Overall, we believe that our culture of collaboration enables us to administer robust risk management and generate solid, long-term results for our managed funds and our clients.
Opportunity
Identifying Opportunity
A significant proportion of the earnings of many Australian companies are generated from offshore markets. Therefore, when looking at these stocks, such as an Australian domiciled global building products supplier, T. Rowe Price’s Australia–based equity analyst evaluates the quality of the opportunity through on the ground site visits to manufacturing plants and meetings with company management, cross-referencing findings with T. Rowe Price teams across the globe.
The result: sound investment decisions made for our clients through global collaboration.
Our Culture of Collaboration
A key market for the company is the US residential housing sector. Changes to the US housing market, local competition, as well as, input and freight-distribution costs are therefore likely to impact upon the company’s operating results and stock performance.
Our Australian analyst collaborates with Baltimore’s housing analyst, transport analyst, and a Fixed Income analyst who covers the corporate bonds issued by the company’s competitors.
A London-based research analyst further factors in their expertise on the supply, demand and pricing of US fibre cement siding. All these information sources are important inputs to help the Australia analyst derive the key assumptions used evaluate the company’s expected operating performance and investment attractiveness.
Research findings are distributed across T. Rowe Price’s global collaborative network to stimulate healthy debate and rigorously test the assumptions and conclusions surrounding the investment idea. This cross-analysis gives confidence to the Australian Equity Portfolio Manager who selects the company stock.
Sydney
Equity Analyst
Baltimore
Housing Analyst
Transport Analyst
Fixed Income Analyst
London
Research Analyst
Sydney
Australian Equity PM
Baltimore
Global Focused Growth Equity PM
Global Equity PM
International Equities PM
Fundamental research
Combined with a thorough macro-understanding, our ‘bottom-up’ research forms the foundation for thousands of investment decisions every day. This helps to ensure that we are well-positioned to understand the true value and possible risks for our clients.
Our approach is particularly important when looking at companies in Asia-Pac where the fast-changing dynamics of the region are creating opportunities to benefit from an increasingly wealthy middle class.
Of course, fundamental research is also critical to our understanding of companies in more mature markets. To understand the earnings potential of Australian companies, our local analysts will visit companies throughout the region and the world. This gives us a more complete view of the competitive landscape as well as a deeper understanding of a particular company’s potential.
By meeting management teams face-to-face, we seek to understand how a company’s specific market strategies and company dynamics fit into this larger landscape of change. In these meetings we challenge our own preconceptions and those of the management team. This often results in penetrating dialogue with revealing insights.
At T. Rowe Price, proprietary fundamental research is core to our ability to construct diversified portfolios of pan-Asian equities, Australian shares and regional fixed income bonds that instil confidence in our clients.
Putting clients first
Of all the principles upon which T. Rowe Price was founded, the importance of putting clients first stands above all others. We believe that the firm’s success follows those of our clients and we strive to build long-term, mutually beneficial relationships.
Historically, our approach has delivered strong risk-adjusted returns for our clients through the fundamentals of good stock selection combined with a macro-understanding of a universe of markets and sectors.
The range of markets in Asia-Pac—and their varying degrees of maturity—offer diverse opportunities for investors. We believe that the emergence of China and India as global leaders in industry and commerce will create real opportunities to invest in good-quality businesses around the region. Meanwhile, Australia should continue to provide investors with opportunities to take of advantage companies with strong global prospects.
T. Rowe Price will continue to seek out opportunities, one-by-one, adopting a long-term view of their potential for our clients.