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SINGAPORE – Singapore Internet Services Group Sea, Chinese electric vehicle maker BYD and e-commerce platform Pinduoduo were Asia’s top three stock market winners this year as investors flocked to companies which continued to grow throughout the COVID-19 pandemic.
Thanks to global monetary easing and fiscal stimuli that generated money for investment, global stock markets have recovered faster than real economies. Such a development created high-flying Asian companies that investors hoped would become the next Tencent Holdings or Alibaba Group Holding – the two most valuable companies in Asia, each worth around $ 700 billion. .
The best example is Sea, known for its Shopee e-commerce platform in Southeast Asia. Its market capitalization has more than quintupled this year to reach $ 102 billion, making it the most valuable listed company in the region. This growth rate is No. 1 among around 500 large Asian companies that had a market capitalization of over $ 10 billion at the end of 2019, according to QUICK-FactSet data as of December 22.
Sea’s three pillars – e-commerce, online gaming, and electronic payment – have all profited from the pandemic and continued to aggressively market to gain market share. Being a rare Southeast Asian tech startup listed on the New York Stock Exchange, it has attracted American investors who see strong growth potential in the region.
Additionally, Sea won a digital banking license in Singapore earlier this month, which would open up more fintech opportunities for the company, thereby increasing its shares.
Likewise, Nasdaq-listed Pinduoduo, known for its generous discounts on group buying, is among a handful of Chinese e-commerce companies that have benefited from rising demand during the pandemic, with market capitalization nearly quadrupled to reach $ 170 billion.
The company’s online sales remained strong even after the pandemic was largely contained in China. In the July-September quarter, Pinduoduo’s revenue soared 89% to 14.2 billion yuan ($ 2.1 billion) from a year earlier, and its net loss narrowed to 784 , 7 million yuan compared to 2.34 billion yuan in the same quarter of last year.
Information technology was arguably the best performing industry in 2020, and this trend may continue next year as consumer behavior has been reshaped by travel bans and lockdowns related to COVID “said Margaret Yang, strategist at DailyFX in Singapore. . “It could have a lasting impact on consumer behavior and preferences.”
Asia’s second-biggest winner, BYD, increased its market cap by 333%. The Shenzhen-based automaker, which has had Warren Buffett’s backing since 2008, has dramatically improved deliveries as China strongly recovers from the pandemic. In November, it more than doubled electric vehicle sales compared to a year ago and now holds the largest share of China’s electric vehicle market.
A BYD electric sedan is on display at a shopping mall in Hangzhou, China. The market capitalization of the Shenzhen-based automaker has jumped more than 300% in 2020 © AP
Investor confidence was also boosted by a breakthrough in BYD’s battery sector. The blade battery that it had been developing for years was released in 2020. The battery can increase energy density by at least 30% and reduce raw material costs by 30%, according to the company.
Other automotive battery manufacturers also made the list of big winners. Contemporary Chinese company Amperex Technology saw its market capitalization more than triple to $ 111 billion, while South Korean company LG Chem saw its value increase 2.5 times. LG Chem’s market share in EV batteries has climbed to 25% this year, from 12% a year ago, when it targeted Europe.
The outlook for LG Chem next year is bright as Joe Biden’s new administration is expected to focus on the environment, which is expected to increase demand for electric cars in the United States.
Globally, Tesla’s stock performance showed investors’ high expectations for electric vehicles, with market value increasing eightfold to over $ 600 billion, far exceeding that of Toyota Motor. , the most valuable company in Japan.
The industry-wide rally has also spawned new entrants in electric vehicles. The market capitalization of Chinese startup EV Nio, which is not among the 500 big Asian companies because its market value was less than $ 10 billion at the end of 2019, has increased 17 times to reach $ 74 billion – higher than General Motors – improved sales and delivery figures boosted investor confidence.
A few healthcare-related IT companies also rose significantly this year, with shares of Hong Kong-listed Alibaba Health Information Technology up 219% and Japanese medical information platform M3 up. 179%.
After falling in March as the pandemic spread around the world and governments halted economic activity, stock prices have been on an upward trajectory since April after infections peaked in many countries.
The Nasdaq Composite Index climbed 43% this year, while South Korea’s Kospi and Japan’s Nikkei Stock Average rose 24% and 12%. The Shanghai Composite Index also rose 10%. The Nikkei Asia300 index, which covers the main stocks in Asia outside of Japan, gained 17%.
However, Southeast Asian markets, which do not hold many high-tech listings, generally underperformed, with Thailand’s SET down 10%.
Five Asian companies were on the list of the 20 most valuable companies in the world: Tencent (No.7), Alibaba (8), Taiwan Semiconductor Manufacturing Co. (12), Samsung Electronics (13) and Chinese alcohol maker Kweichow Moutai (17). There were only four Asian companies in the top 20 at the end of 2019. TSMC and Kweichow Moutai are new entrants; The Industrial and Commercial Bank of China has been removed from the list.
Some Asian companies took advantage of the stock market boom to go public this year, making successful initial public offerings. Chinese company KE Holdings, which was listed on the NYSE in August – the largest IPO of a Chinese company in the United States this year – is now valued at almost $ 80 billion, nearly eight times its value when Tencent and SoftBank Group last invested in the company. year.
The company, also known as Beike Zhaofang, is the continent’s largest online real estate transaction platform, primarily earning commission income. Investors were drawn to the company’s business model, as it charges up to 3% commission on home sales while keeping overhead costs lower than traditional real estate agencies. The company’s adjusted net profit more than tripled to 1.86 billion yuan in the quarter ended in September.
Meanwhile, Asian companies in traditional sectors like energy and transportation have lost significant market value this year as their core businesses have been hit hard by travel restrictions and other pandemic restrictions. The market value of Japanese oil giant INPEX and Chinese state-owned oil company CNOOC fell 52 percent and 44 percent respectively, while that of West Japan Railway fell 47 percent.
Some analysts believe the bull run is not over. “The upward path remains intact for the global stock market, although some technical pullbacks are possible in the first quarter of 2021,” Yang said.
She pointed out that stock valuations appear to be “over-exploited” but that the accommodating monetary environment and vaccine hopes could continue to support a bull market in the medium term.
She said US President-elect Biden could make major changes to US foreign policy alongside tax reforms. “Apart from that, the lingering impact of the COVID-19 pandemic, uneven deployment of COVID vaccines around the world, and the ongoing US-China conflict are among the risks of key events.”
Additional reporting by Nikki Sun and Narayanan Somasundaram in Hong Kong and Kim Jaewon in Seoul.
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