By 2050, most of the global middle class is expected to be in Asia. Per-person income is forecast to reach Europe’s levels today, making this region the key global economic growth driver. The good news is that there are plenty of FTSE stocks offering ways to invest in this growth.
Here, I’ll highlight two that I think deserve closer attention.
FTSE 100
Let’s start with the largest by far, which is HSBC (LSE:HSBA). In recent years, the FTSE 100 banking giant has been shedding western assets to focus on Asian markets like India and mainland China.
In particular, HSBC has its eyes on higher revenue from wealth management in the region. Last year, HSBC’s wealth revenues in Asia soared 32% year on year, contributing $47bn of the $64bn in net new invested assets.
In India, it has been approved to open bank branches in 20 new cities. Management says this will expand the wealth opportunity.
Naturally, the lender faces competition in the region. And some of these growth markets can be very volatile, especially with global trade uncertainties persisting. Falling interest rates in the West will also put pressure on the net interest margin.
However, Asian wealth management is a very lucrative long-term opportunity worth pursuing. Hong Kong, which is HSBC’s most profitable market, is set to overtake Switzerland as the world’s biggest cross-border wealth hub by 2030 (possibly sooner).
Over the medium term, HSBC is aiming to grow wealth fees by double-digits.
Despite the stock being near an all-time high, the valuation doesn’t look particularly stretched. The forward price-to-earnings multiple is 9.2, while there’s a 5% dividend yield on offer.
I reckon HSBC stock is well worth considering today.
FTSE 250
For more diversity, investors might want to consider Pacific Horizon Investment Trust (LSE:PHI). This FTSE 250 trust offers exposure to dozens of growth companies across the region (excluding Japan).
The portfolio today looks really strong to me. The top spot goes to Taiwan Semiconductor Manufacturing Co (TSMC), the world’s biggest semiconductor foundry, which makes chips for Apple and Nvidia. It’s expected to post 30% revenue growth this year.
Also among the top 10 holdings is Delhivery, a leading Indian logistics company, and Singapore’s Sea Limited, which operates Southeast Asia’s leading e-commerce platform (Shopee).
Meanwhile, ByteDance and PDD Holdings have experienced incredible international growth with TikTok and Temu, respectively.
Over 10 years, the trust’s outperformance has been cracking: 264% versus 126% for the MSCI All Country Asia ex Japan Index.
However, it’s worth point out that I do expect volatility in the coming months. President Trump’s tariffs haven’t been fully felt yet, but it could be severe for Asian economies that rely on western exports (Vietnam, for example).
But by 2050, around a third of the global population will live in just China and India. Success in these massive economies should make scaling globally far easier, raising the likelihood of more TikTok-esque giants emerging from Asia.
The stock is up 17% year to date, but remains 29% off a 2021 peak. The shares are also trading at a 10% discount to net asset value.
With more institutional capital expected to flow to Asia in future, I expect this well-managed investment trust to perform well.
