Should We Invest In Asian Tech Stocks Right Now?
Tech stocks have been on one massive rally this year. The technology sector has performed remarkably well despite the pandemic. The strong performance can be reflected from the impressive run in Nasdaq Composite this year, up 26% year to date. Here’s the thing, many investors are beginning to be skeptical and think that we are in a tech bubble that is about to burst. But what if the tech companies are really building high-growth and highly defensible businesses? Should we for once stop worrying about the valuations and focus on the prospects of these high growth companies instead?
Emerging markets are the next growth engine of the global economy. According to a report by the World Economic Forum, Asia is expected to contribute around 60% of global GDP by 2030. But, you don’t need to be an economist to realize the importance of emerging markets in the coming decades. Emerging markets like China, India, and Southeast Asia have a combined population at least 10 times that of the US. While they do have some characteristics of developed markets, they are not fully there yet. The interesting thing about these markets? They could achieve double-digit growth by leveraging existing technology.
Since the coronavirus-induced market sell-off in March, Asian tech stocks have rallied in triple-digit percentages. This enticed investors to look for the best tech stocks to buy from Asia. Asian firms are beginning to play an increasing role in space. If you are looking for the best tech stocks to watch, or new tech companies that have yet to meet their full potential, we can start looking for tech stocks that have strong exposure in the Asia-Pacific region. That said, are these tech stocks on your watchlist this July?
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Top Tech Stocks To Watch In July: Sea Limited
First up the list is a fast-growing Asian tech stock, but it isn’t from China. Shares of Sea Limited (SE Stock Report) gained 34.4% in June alone. The Singapore-based e-commerce, payments, and online gaming specialist didn’t have any specific news that could shore up the share prices. In terms of attractiveness, Southeast Asia has long been overshadowed in terms of international investors’ attention. Given the region’s large population of 740 million and its relatively low rate of development, tech companies in the region are worth a closer look.
If you have been a reader of StockMarket.com, you might have come across Sea Ltd. when we first discussed it in May. Since then, SE stocks have doubled in share prices in a short span of a few weeks. The pandemic has created a sweet spot for the company to thrive. If you are a fan of the tech space, you might have come across gaming and e-commerce companies that are racing ahead when the broader markets are still in the red. Sea’s dual focus on e-commerce services and online gaming is a perfect recipe for the stock to rally when the Covid-19 continues to paralyze the global economy in many ways.
Shopee, The Catalyst For SE Stock
The most important driver within Sea is its e-commerce site, Shopee. It is worth every investor’s attention. To the uninitiated, Shopee is the Amazon of Southeast Asia. The e-commerce segment contributed around 30-40% of the company’s total revenue. Shopee has undergone exponential growth in the last few years, and it is currently the largest e-commerce platform in the region. Although there are a number of competitors in this region, Shopee has managed to grab the largest market share.
Top Tech Stocks To Watch In July: JD.com
Shares of JD.com (JD Stock Report) have climbed more than 10% in June. The only major news with the company is the second public listing on the Hong Kong Stock Exchange in mid-June. JD stock seems to be gaining ground from the listing, in addition to encouraging data from the online retail industry and increasing favorable coverage from analysts.
Cloud and AI Business To Power JD Stock
JD has a leading position in China’s large and fast-growing e-commerce market, and its trusted brand, major infrastructure and order fulfillment advantages should help it capitalize on continued growth for online retail. However, the company is not resting on its laurels. It continues to expand other business segments of the company.
The company’s recent partnership with Cloudflare (NET Stock Report) to strengthen its cloud and AI business could offer JD the infrastructure to operate smoothly and ensure the scalability of its business moving forward. Cloudflare has been in the Chinese market for five years and is currently operating in over 200 cities worldwide. The strategic shift for JD to focus more on AI and Cloud businesses with recent partnerships is crucial in the company’s next phase of growth. JD’s stock doesn’t come cheap with a PE ratio of 104, but it’s scale, stable margins, and expanding ecosystem all could justify that premium. All of these make JD one of the top tech stocks to watch in the region.