ESG Tycoons Prefer Asian Markets for Investments

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The economic dominance of the Asian countries enters into a novel arena in the post-Covid world by securing ESG dominance. This dominance has been attained by China and its corresponding Asian peers. TheEPFR Global data suggests that the world’s second-largest economy and its Asian peers cornered 75 cents out of each dollar of capital invested in 2020 across emerging-market stocks compliant with environmental, social and governance norms.

Further Growth in 2021

An augmented shift is set to be noted in the current year as the region’s share is growing to 83.33 cents per dollar. As the region has had relative success in containing the pandemic and is set to grow faster than the rest of the world in 2021, the Asian nations are already the stand-out choice of global equity investors. This coupled with the fast-growing technology companies such as Tencent Holdings Ltd. and Alibaba Group Holdings Ltd., whose carbon-light digital businesses outscore the commodity and energy producers of Latin America, the Middle East, Africa and Russia on ESG metrics make them a preferred choice for investors.

An Expert Opinion

In recent years, Asia has emerged as the technology and consumption engine of emerging markets. The benchmark gauge for information-technology companies in the developing world comes from five of the region’s markets — Taiwan, South Korea, China, India and Hong Kong- that accord for more than 98% of the weight of the investment. Such an extreme skew makes it virtually impossible for ESG asset allocators to avoid giving a lion’s share of their capital to the continent.The biggest EM-dedicated ESG fund-iShares ESG Aware MSCI EM Exchange Traded Fund, sets aside 81% of its portfolio to Asia with tech giants Taiwan Semiconductor Manufacturing Co., Tencent, Alibaba and Samsung Electronics Co. as top holdings. It has returned nearly 12% this year, beating the emerging-equity benchmark index.

According to Claire Peck, a London-based investment specialist at JPMorgan Asset Management explains the growth experienced by the region stating, “There is a natural pull toward Asia; Technology companies are generally asset light businesses, which naturally mean they have better ESG credentials.”