By Godwin Anyebe
Since the end of the Second World War, the US has been the 800-pound gorilla of the world economy – the largest in monetary terms, the largest producer, the largest innovator, the largest financial market.
Bu that dominance has been challenged in the last couple of decades, with the rise of China becoming the world’s second-largest economy, the expansion of Taiwan’s semiconductor chip industry to global leadership, the ingenuity of South Korean tech firms – especially in AI, and the expansion of India’s economy as the world’s largest by population.
For billionaire hedge manager Mark Mobius, the emergence of new players among the world-leading economies opens up new opportunities for a more diversified portfolio – and the famously successful investor recently acknowledged that his own portfolio is completely divested from US-based companies.
Mobius isn’t just boosting and promoting emerging economies and markets – he’s putting his money where his mouth is, and going all-in.
Mobius is particularly intrigued by the potential of Taiwan, South Korea, and India. In a recent interview, he emphasized, “We are seeking companies that have established international diversification, and we’ve come across numerous enterprises with remarkable technological prowess that enables them to broaden their investor outreach.”
Mobius goes on to cite the booming high-tech in Taiwan and South Korea, and India’s fast GDP growth of 7% and population of 1.40 billion.
Mobius sees all three of these countries as economic leaders for the coming decades.
Wall Street’s analysts are finding plenty to agree with in that assessment, and they’ve been picking out emerging market stocks that are poised to gain going forward from here. Using , we pinpointed two such names that are considered ‘Strong Buys.’ Not to mention considerable upside potential is on the table here. Let’s take a closer look.
Taiwan has become the world’s leader in semiconductor chip output, providing some 60% of the global supply of these vital computer components, and Taiwan Semiconductor is one of the country’s largest chip makers. The company operates primarily as a foundry, an advanced production plant that takes third-party contracts to manufacture semiconductor chips in mass runs. The client firms handle the design work and prototypes, while TSM handles the regular production; the model has proven successful for the industry.
It’s proven successful for TSM, specifically, too. The company has approximately 58% market share of Taiwan’s chip foundry business, and a market cap of more than $514 billion.
Taiwan Semiconductor’s financial results showed several quarters of positive results, and consistent gains, coming out of the pandemic period and through the end of last year. The company found support in increased product demand post-COVID.
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This year, however, slowing chip demand – caused by a combination of continued supply chain disruptions, a slower-than-hoped reopening in China, higher interest rates causing a tighter credit environment, and increased inflation forcing consumers to pare back spending – has impacted the chip foundry’s top and bottom lines.
In the last reported quarter, 2Q23, TSM showed revenues of US$15.68 billion. While this was down 13.7% from 2Q22, it beat the analyst expectations by US$300 million. The bottom line figure, an EPS of $1.14 in US currency, also fell 26% year-over-year, but came in better than expected, by 6 cents per share.
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