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Two asset management stocks poised to benefit from Asia growth

Two asset management stocks poised to benefit from Asia growth

As asset managers race to scale up in Asia, Amundi [EPA:AMUN] and Schroders LSE:SDR look best-positioned to access one of the industry’s largest and fastest-growing opportunities, according to a new report from Bloomberg Intelligence (BI).

Amundi’s new wealth-management joint venture with the Bank of China (BoC) is set to bolster its already strong presence across Asia, supported by tie-ups with China’s ABC, India’s SBI and Korea’s NH, giving it a first-mover advantage among peers, according to Bloomberg Intelligence. Asian assets under management (18% of its total) are set to soar 60% to 500 billion euros by 2025, in-line with guidance, having multiplied seven-fold since 2010.

“We believe Amundi’s BoC JV target – to manage 60 billion euros and generate 50 million euros of net income by 2025 – is ambitious, yet feasible,” said Bloomberg Senior Government Analyst Sarah Jane Mahmud.

The Amundi share price has developed significant momentum since March when it moved off the 63 euro level. At time of writing it was trading at close to 75 euro. The shares had reached a peak of close to 80 euro recently. The company is trading at a price earnings ratio of 14.96 which makes it look relatively cheap in our view.

Schroders to capitalise on China growth opportunities

Schroders is also well-positioned to capitalize on China’s growth opportunities, in the view of Bloomberg Intelligence, with new regulatory licenses enabling the scaling up and strengthening of its 16-year partnership with the Bank of Communications, the country’s number five lender.

“With this, it gains access to the 2.9 trillion-pound domestic-bank wealth management market, with business expected to start in 4Q. Moreover, it should also see the doors open to the 2.6 trillion-pound retail, private wealth and third-pillar pension market, with the first product launches due by mid-2022,” adds Mahmud.

We saw some great returns out of the Schroders share price in November, when shares moved from GBX 2614 to hit around GBX 3500 by early January. It was a Christmas bull run, but the surge in buying seemed to run out of steam by mid-January and the stock has really not moved far off that mark. Schroders looks slightly more expensive than Amundi, with a similar dividend yield, but Amundi seems to have more momentum in the market at the moment. If we had to choose between the two, we lean towards Amundi, as it has a much bigger AuM and we feel it is making more impact in the ETF market, which we think will be crucial for future asset growth.

DWS in danger of becoming a runner up

Among other asset managers, DWS [ETR:DWS] may need to ramp up its presence in the Asia Pacific region to avoid becoming a runner-up among peers, states Bloomberg. DWS continues to monitor growth opportunities, yet its APAC presence remains small with directly-managed assets representing just 5.6% of its total, a low level vs. peers Schroders (19%), Amundi (18%) and Janus Henderson (14%).

“DWS may therefore need to build on existing partnerships with China’s Harvest (DWS has a 30% stake) and Nippon Life (which owns a 5% holding in DWS) to capture market share,” notes Mahmud.

DWS stock has seen steady growth  since October when it was trading at around 28 euros. The price has crossed the 40 euro level recently. At time of writing it stood at 38.78. One to watch as it has developed solid momentum in the first half of this year. It has a 4.67% dividend yield which may also prove attractive for some.

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SchroderAsian Total Return Investment Company plcAIC: Asia Pacific
LON:ATR / GBP
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SchroderAsiaPacific Fund plcAIC: Asia Pacific
LON:SDPI / GBP
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SchroderBSC Social Impact Trust plcAIC: Flexible investment
LON:SBSI / GBP
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SchroderGreencoat UK Wind plcAIC: Renewable energy infrastructure
LON:UKW / GBP
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SchroderIncome Growth Fund plcAIC: UK equity income
LON:SCF / GBP
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SchroderInternational Biotechnology Trust plcAIC: Biotechnology & healthcare
LON:IBT / GBP
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SchroderJapan Trust plcAIC: Japan
LON:SJG / GBP
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SchroderOriental Income Fund LimitedAIC: Asia Pacific equity income
LON:SOI / GBP
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SchroderReal Estate Investment Trust LimitedAIC: UK commercial property
LON:SREI / GBP
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SchroderUK Mid Cap Fund plcAIC: UK all companies
LON:SCP / GBP
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