SooHai Lim is bullish on e-commerce in Southeast Asia, so much so that he sees the region coming up with its own version of Alibaba Group Holding Ltd.
The coronavirus pandemic has accelerated penetration rates of e-commerce in Southeast Asia and the region has become one of the key growth areas for such a business, according to the head of Asia ex-China equities at Barings, which manages about $346 billion globally.
While Lim declined to name any specific stocks citing policy, the Barings Eastern Trust he manages had US-listed shares of Singapore’s Sea Ltd., an online gaming-to-shopping firm, among its top holdings at the end of May, according to its latest fact sheet. Barings Eastern, with the equivalent of US$168 million ($232 million) in assets, has beaten 96% of its peers with a 23% return this year, according to Bloomberg-compiled data.
E-commerce players have caught the imagination of investors worldwide this year as the pandemic forces people to stay at home, helping trigger a boom in online shopping. Stocks in the sector have been among the world’s best performers, amid bets that changes in consumer behavior owing to coronavirus-induced lockdowns may become permanent.
“The leader in this space, Asean’s next Alibaba,” should turn profitable in the coming next one to two years, further enhancing its dominance, Lim wrote in an emailed interview.
Barings Asean Frontiers Fund, another $319 million fund managed by Lim, had Sea as its second-biggest holding as of end-May.
Sea’s US depositary receipts have surged 185% this year and hit a record earlier this month. Its market capitalization now exceeds Bank Central Asia Tbk, making it the most-valuable company in Southeast Asia. Sea’s sales more than doubled in the first quarter when Covid-19 lockdowns drove online shopping unit Shopee and digital entertainment service Garena.
Meanwhile, Tencent and Alibaba were Barings Eastern Trust’s two biggest holdings, making up almost a fifth of its portfolio as of end-May.
“Leading Chinese ecommerce players continue to drive revenue growth through helping merchants sell via innovative ways such as live streaming,” he wrote. “Our Asean e-commerce plays, if management executes well, could possibly follow the path of their more developed China peers and thus have many years of strong growth ahead of them.”
