Asian Stocks Most Owned by Thematic Funds

Morningstar analysts have identified 10 stocks, including leaders from China, Japan, South Korea and Taiwan. 

Kate Lin 16 May, 2023 | 10:33
Facebook Twitter LinkedIn


Thematic funds offer investors opportunities to capture well-publicized macro or micro trends that claim to transcend business cycles. Kenneth Lamont, senior manager research analyst at Morningstar, thinks that the vast menu of thematic funds (and their common holdings) provide insights into “the world through a thematic lens.”

In his latest research on thematic funds managed and sold globally (excluding mainland China-domiciled funds), Lamont finds that the most-held stocks across the globe are growth oriented and have technology story elements. He tags funds and stocks with 24 themes. While each thematic fund belongs to one of the 24 groups, stocks owned by thematic funds could be identified under one or more themes.

Alphabet Is the Most Widely Owned Stock in the World

Alphabet (GOOGL) is the most owned stock in the thematic world. 17 different groups of thematic funds own the parent company of search engine Google, amounting to about 417 funds. Microsoft (MSFT) and Nvidia (NVDA), a graphics processing unit maker, both appear as a holding in 414 funds. As many as 367 funds invest in e-commerce behemoth Amazon (AMZN).

Lamont says: “The reasons we see many technology stocks is that this is the element that holds future trends together. Some of these businesses also tie and unify multiple technologies that enable and give boost to a secular shift of technological advancement. The future of businesses pegs to the understanding of data and communications and such technologies.”

So which Asian stocks are popular among thematic funds?

Tencent is the Asian Stock Favourite

In Asia, Tencent Holdings (00700) is the stock present in most themes, including Consumer, Digital economy, and 10 others. Taiwan Semiconductor appears as a holding for 11 themes, while exposure to Alibaba Group and Meituan sprawl across 10 themes.

Interest in Tencent (00700) comes from funds in the Consumer (53) and Digital Economy (48) themes. 18 fintech funds also own Tencent. According to Morningstar equity research, Tencent’s all-in-one social media platform WeChat boasts 1.2 billion-plus users. The game development and cloud capability of the Chinese internet giant also gained traction among strategies investing with a theme of Virtual Reality and Gaming (14) and Artificial Intelligence + Big Data (13).

Thematic Funds’ Bullish Views on the Semiconductor Story

Taiwan is home to the world’s largest and most successful semiconductor foundries – and other players in the semiconductor value chain. Taiwan Semiconductor Manufacturing Co (2330), is the second most popular Asian stock and is owned by 272 thematic funds. TSMC’s theme profile differs much from Tencent’s.

A common theme investing in TSMC is Next-Gen Communications + Digital Infrastructure, totaling 22. Meanwhile, semiconductor chips are an integral part of data centers and other data-processing procedures and an enabler of cutting-edge technologies, which may have explained why 20 Artificial Intelligence + Big Data funds capitalize on TSMC’s industry-leading position in semiconductors. MediaTek Inc (2454), owned by 107 funds, also made to the list of most-held Taiwanese stocks. Japan’s Renesas Electronics (6723) is another major chip industry stock.

Samsung Leads South Korea Holdings

South Korea’s largest company by market capitalization, Samsung Electronics (005930), and its battery and electronic materials arm Samsung SDI (006400) are among the most owned stocks in the market, owned by 172 and 176 thematic funds.

The investment case for Samsung SDI is straightforward – all revolving back to a switch to electric vehicles from fuel-combusting cars. Across all 24 fund themes, the company is most owned by energy transition (50), future mobility (32), political (14), and battery technology (12) funds. Its parent, Samsung Electronics though attracts fund capital from Next Gen Communications + Digital Infrastructure (18), Energy Transition (11), and Fintech (11).

Japan: A Story of Consumer Electronics and Robotics

In Japan, two household names – Sony Group (6758) and Nintendo (7974) made to the top 20 list. Sony Group is a conglomerate which sells consumer electronics, telecommunications products, and is also an entertainment company that products blockbuster movie like the Spiderman trilogy. Consumer (28) and Next Gen Communications + Digital Infrastructure (12) have banked on the US$ 94 billion company. Nintendo’s games capture the hearts of child and adult gamers, but the stock has captured the money of managers of Virtual reality and Gaming (17) and Consumer (14) funds.

Apart from consumer products, another batch of thematic funds also bought into the future of automation. Automation sensor and equipment maker Keyence (6861) and robotic company Fanuc (6954) are owned by 161 and 97 funds, respectively. Each is invested by 25 Robotics + Automation funds. Keyence is also owned by Energy Transition (18), Artificial Intelligence + Big Data (14), and Resource Management (11) strategies.

Facebook Twitter LinkedIn

About Author

Kate Lin

Kate Lin  is an Editor for Morningstar Asia, and is based in Hong Kong

© Copyright 2024 Morningstar Asia Ltd. All rights reserved.

Terms of Use        Privacy Policy         Disclosures