The connotation Asia-Pacific immediately brings the image of the behemoth China, economic powerhouse Japan, and an endless vast ocean with the US west coast at its end. However, the region is home to a more diverse set of countries that also play a crucial role in the global economy. The developed world is not restricted to the North American and Western European regions. The APAC region has poster child countries that have reached developed world status while also maintaining a more equal income for its citizens compared to the rest of the world.
Refer to our earlier blog piece on China and Japan. In this note, we will focus on the rest of the region.
The four major economies that make up the developed APAC region-ex Japan are Australia, New Zealand, Hong Kong, and Singapore.
Australia is the sixth-largest country in size. However, large portions of the country are uninhabitable due to the hot dry conditions and infertile soil. While the indigenous population of aborigines has occupied the country for close to 70000 years, it was the colonization by the British in the 17th century and the eventual immigration that followed that paved way for the country to grow in economic clout. Australia is rich in natural resources and is one of the world’s largest miners of iron ore, bauxite, coal, and natural gas. The country also produces gold, copper, mineral sands, and other materials. From a geopolitical perspective, Australis plays a key role in the region with its alliances with the United States and the UK. However, A large quantity of Australia’s mining output is exported to China, and as such China plays a vital role in the economy of the country.
Some of the top companies from Australia are:
BHP Group is one of the largest metals and mining companies in the world. It operates coal, iron ore, and copper mines. BHP also produces petroleum. The company has mines across the world, including Australia, Canada, Brazil, and Chile. BHP generated $61 Billion in 2021 revenues.
Along with BHP, Rio Tinto is one of the largest mining enterprises in the world and is based in Australia. The firm produces Iron ore, copper, Aluminium, Uranium, and other minerals. Rio Tinto generated $45 billion in 2021 revenues.
James Hardie is a building materials company with listings in Australia and the US. The firm is one of the largest makers of fiber cement, a specialty product used in roofing. James Hardie has more than a hundred years of history and employs over 5000 people across the globe.
Amcor is an Australian company operating in the packaging industry. The firm makes both flexible and rigid packaging materials. Its products are used across a variety of industries including cosmetics, food, beverages, and pharmaceuticals. Amcor generated close to $13 billion in 2021 revenues and operates across the world.
Source: Morningstar
New Zealand is one of the most remote countries in the world with an average of over 1000 KM distance from any other major landmass. However, the country has a per capita GDP of over $36,000 and ranks among the top 15 nations in the world in terms of the human development index. New Zealand has a largely temperate climate which is apt for several agricultural and farming activities. The country is one of the largest producers of wool and is a major producer of milk and milk products that are exported to the rest of Asia. New Zealand also boasts a variety of terrain and is a major tourist destination for adventure sports.
There are no New Zealand stocks that trade on the major US exchanges. However, quite a few OTC ADRs are available. Nonetheless, some of the major companies based in New Zealand include Ryman Healthcare, an operator of retirement homes, Fisher and Paykel, a maker of medical equipment, A2 Milk a producer of milk and infant formula, and Auckland International Airport, the operator of the largest airport system in the country.
Singapore is a city-state with an area of just 733 square Kms. However, the country plays a major role in the regional economy. The country also ranks high in the human development index and has one of the largest per capita GDPs in the world, ranking on par with the European principalities of Monaco and Liechtenstein. Singapore is known for its open, free, and business-friendly economy. Some of the major industries include banking & financial services, electronics, and services. The port of Singapore is one of the busiest in the world and the country is home to several shipping companies.
Singapore again does not have many ADRs that are listed in the main US exchanges, but several companies that trade over the counter in the US as ADRs. These include DBS the bank, First Resources a major player in the palm oil industry, Genting Singapore, an operator of resorts and gaming centers, and Keppel, a major shipping company. One of the largest companies to be listed in the US and based in Singapore is Sea Limited.
Operating out of Singapore, Sea is a technology company operating across multiple segments. The firm’s main businesses include e-commerce, video gaming and operate across Malaysia, Thailand, Indonesia, Vietnam, and the Philippines.
Source: Morningstar
Hong Kong is a special administrative region of China. Hong Kong was handed back to China in 1997 after remaining for more than a century as a British colony. Hong Kong is governed by China under a ‘one country, two systems’ framework with an economic system that is more market-driven than mainland China. Hong Kong is also far more developed in terms of the human development index and GDP per capita. The country is home to several global companies and boasts a stock exchange that is one of the largest in the world.
Like many other countries in the region, there are hardly any Hong Kong stocks that trade in the Main US exchanges, but several of them trade as OTC ADRs. These include Bank of China, one of the largest regional banks, AIA, a major financial services company, CK Hutchison Holdings, a large conglomerate, and Galaxy Entertainment, a top player in the leisure and gaming market. Melco Resorts & Entertainment, however, trades on the Nasdaq exchange.
Melco is an integrated player in the entertainment business. The firm operates resorts and gambling facilities across multiple locations. Melco’s main resorts are in the Macau special administrative region. The firm also owns a large resort in the Philippines.
Source: Morningstar
Investment Options:
While just a handful of ADRs are available in the US to directly invest in the stocks from this region, a variety of ETF options are available. These include regional ETFs such as iShares MSCI-Australia ETF(EWA), iShares MSCI New Zealand ETF (ENZL), iShares MSCI Singapore ETF (EWS), and iShares MSCI Hong Kong ETF (EWH). An ETF that invests in all the above regions is also available in the form of iShares MSCI Pacific ex Japan ETF (EPP).
Source: Morningstar
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