Long tail of technology

JPMorgan Asia Growth & Income plc (JAGI) has benefited from the strength in the technology stocks, with a slight overweight to the sector and a number of stocks that have generated strong returns over the past year. The portfolio’s largest position, and second-biggest overweight position vs. the benchmark, is TSMC, the Taiwanese semiconductor company that has a 90% market share of leading-edge chips that are critical for AI systems. Delta Electronics is another Taiwanese company supporting the growth of AI and was the top contributor to JAGI’s returns over the past year ending 30 September 2025. Demand for the company’s power supply and cooling solutions is rising significantly with the buildout of data centres.

Alibaba, the Chinese technology giant, is another top holding and large active position that is benefiting from AI in another way—as an AI model owner. The company has tripled its AI customers and offers cloud services to a diverse customer base, leading to revenue growth with stable margins. Alibaba will help fuel continued AI growth with a massive capital spending commitment on AI infrastructure over the coming years.

Hong Kong Exchanges & Clearing was also a top contributor to JAGI’s returns over the past year, partly due to the impact of AI on the technology sector. The company has a monopoly position and has benefited from increased turnover and trading, the growing Chinese technology sector and more Chinese companies listing in Hong Kong.

Korea offers tech exposure and more

Several Korean technology companies have also generated high returns over the past year, including Hynix and Samsung Electronics, which have a combined 50% market share of memory chips. Hynix shares appreciated so much over the past year that the portfolio managers decided to take some profits and reduced the position size. Korea is also home to many other technology supply companies benefitting from the AI buildout.

However, the portfolio managers are excited about more than technology companies in Korea, which is JAGI’s largest country overweight. Improving corporate governance and more efficient capital allocation have the potential to drive returns of South Korean equities, which still trade at a discount to Asian equities, on average. Financials stocks are leading Korea’s “Value Up” initiative (the government’s effort to boost the value and appeal of South Korean companies by addressing persistent undervaluation of the South Korean stocks compared to global peers) and price-to-book valuations have started to increase.

Some Korean companies also have potential to significantly increase their returns on equity (ROE) by better optimising the cash on their balance sheets. The portfolio managers increased JAGI’s position in Samsung C&T, the parent company of Samsung, as they see potential to improve ROE and potentially use cash to buy back shares.

Looking for opportunities as India readjusts

The Indian equity market has cooled amid slower earnings growth and uncertainty over US tariffs. Many highly valued stocks, including portfolio holding Colgate India, declined sharply over the past year. The Indian government is trying to stimulate the economy by lowering income taxes, cutting interest rates and reducing the tax on many goods. These initiatives will take a few quarters to flow through the economy but the JAGI portfolio managers continue to look for opportunities to add Indian stocks at more attractive valuations.

One Indian company in the portfolio is Eternal, a market leader in quick commerce and food delivery. The company offers delivery of a large assortment of products within 15 minutes and has executed well, producing strong operating metrics.

Returns across equity markets in Indonesia, Thailand and Malaysia have been weaker, reflecting a mix of corporate governance issues, slower growth and less exposure to the AI theme. JAGI’s positions in two major Indonesian banks, Bank Central Asia and Bank Mandiri, posted negative returns over the past year due to some governance issues as well as a lower growth outlook that impacted demand for credit and return on capital at the banks.

JAGI generates alpha and income

As of 30 September 2025, JAGI’s returns were ahead of the benchmark in all time periods while the trust pays out 6% of its net asset value (NAV) per year, providing an enhanced dividend of 1.25% per quarter. The locally based and highly experienced JAGI investment team will continue to invest in innovation and technology across Asia, seeking quality companies that can drive long-term returns.

Disclosures

The risk indicator assumes you keep the product for 5 year(s). The risk of the product may be significantly higher if held for less than the recommended holding period.

Investment Objective:

The Company aims to provide total return from investing in equities quoted on the stock markets of Asia, excluding Japan. The Company will have a diversified portfolio of Asian stocks comprising around 50 to 80 investments. The Company typically invests directly although it may also take positions in pooled vehicles to gain exposure to such companies. The Company aims to pay, in the absence of unforeseen circumstances regular quarterly dividends each equivalent to 1% of the NAV at the end of each quarter. The Company also has the ability to use gearing up to a maximum level of 20% of net assets to increase potential returns to shareholders. Gearing may magnify gains or losses experienced by the Company.

Risk Profile:

Exchange rate changes may cause the value of underlying overseas investments to go down as well as up.

Investments in emerging markets may involve a higher element of risk due to political and economic instability and underdeveloped markets and systems. Shares may also be traded less frequently than those on established markets. This means that there may be difficulty in both buying and selling shares and individual share prices may be subject to short-term price fluctuations.

External factors may cause an entire asset class to decline in value. Prices and values of all shares or all bonds and income could decline at the same time, or fluctuate in response to the performance of individual companies and general market conditions.

This Company may utilise gearing (borrowing) which will exaggerate market movements both up and down.

This Company may also invest in smaller companies which may increase its risk profile.

The share price may trade at a discount to the Net Asset Value of the Company.

The Company may invest in China A-Shares through the Shanghai-Hong Kong Stock Connect program which is subject to regulatory change, quota limitations and also operational constraints which may result in increased counterparty risk.