Top fund manager hunts for next Alibaba in South-east Asia

LIM Soo Hai is bullish on e-commerce in South-east Asia, so much so that he sees the region coming up with its own version of Alibaba Group Holding Ltd.

The Covid-19 pandemic has accelerated penetration rates of e-commerce in South-east 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 US$346 billion globally.

While Mr 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 in assets, has beaten 96 per cent of its peers with a 23 per cent 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 behaviour owing to Covid-19-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, Mr Lim wrote in an e-mailed interview.

Barings Asean Frontiers Fund, another US$319 million fund managed by Mr Lim, had Sea as its second-biggest holding as of end-May.

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Sea's US depositary receipts have surged 185 per cent this year and hit a record earlier this month. Its market capitalisation now exceeds Bank Central Asia Tbk, making it the most-valuable company in South-east 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 e-commerce 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." BLOOMBERG

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