Why Asian equities’ growth will outlast the AI-driven semiconductor cycle

Produced in partnership with Franklin Templeton.

The world’s insatiable demand for semiconductors has driven Asian equities to a new height and scale, with Taiwan and South Korea surpassing developed countries like Canada and the UK in total market value earlier this year. But Yi Ping Liao, portfolio manager at Franklin Templeton specialising in Asian equities ex Japan, argues there is something more durable underpinning the Asian equities growth story: human capital at a high quality and lower cost.

This advantage has allowed Asian companies to operate on a different level of scale and speed that’s difficult to replicate elsewhere, especially when it comes to research and development. A good example is Chinese EV giant BYD which houses 120,000 engineers in China focusing on EV and energy solutions-related R&D alone, as the company aspires to be a market leader not only on price but also innovation.

“Because of the human capital, because of the network effects, Asia continues to be well positioned to be a leader in key structural growth trends that arise – in further iterations of tech hardware, in newer areas that are still very small and nascent, like robotics, in medicine, and healthcare,” Liao said.

In the latest episode of the Fiduciary Investors Series, Liao spoke with Top1000funds.com Asia Pacific correspondent Darcy Song on why the convergence of innovation, demographics and improving shareholder returns makes Asian equities an increasingly compelling diversification trade for asset owners navigating a geopolitically fractured world.