Asian Tech Companies Outperform Faangs Stock Market Potential
In recent decades the power of the stock market has changed hands. Since the beginning of the new century, the Chinese technology sector and listed companies have gained more and more prominence .
Currently, the technological presence is overwhelming among the top ten of the stock market globally and it is precisely the Asians -Samsung, Alibaba, Tencent and Taiwan Semiconductor- the firms with the greatest potential for the near future.
If we look back forty years, we can see how the largest companies on the world stock market have undergone a total renovation. And it is that the titans of the stock market (the companies that capitalize the most) have undergone a transformation to the rhythm of latent social change since the end of the last century.
In 1980, the group of the 10 most powerful was clearly dominated by the Americans, and ten years later the Japanese were the most valuable. At the beginning of the 21st century, the Japanese market was losing strength and, although the US continued to control the panorama, China was gaining a greater presence among the giants. At the same time, over the years, the oil companies – which dominated the stock market in the 80s – lost power and the technology companies found, in an increasingly digitized world, the opportunity to take their place.
Today, none of the ten largest listed companies in the world coincide with those seen in the last century. Taking into account those companies whose evolution is followed by a sufficient number of analysts to obtain supported estimates, the current leaders are Apple, Microsoft -the oldest on this podium-, Amazon, Alphabet, Facebook, Tencent, Tesla, Alibaba, Taiwan Semiconductor and Samsung.
And it is the four Asians that have the greatest potential in the short term , according to market consensus estimates collected by FactSet. In all of them the advice for the investor is to acquire their securities.
Samsung Electronics is the main bet for analysts in this race of colossi. Although it is currently in the red in 2021, with slight annual losses of 1%, they see an upward journey of almost 31% for the next 12 months.
In addition, the South Korean is the second company for which analysts expect higher net profit growth for this year 2021, only preceded by Tesla. This would be a 43% increase compared to last year’s results.
“The recent corrections in the value come mainly from the rises in the prices of raw materials and inflation fears, which have contributed to highlight the uncertainty of demand,” they say from EBEST Investment & Securities. “However, semiconductor growth is strong enough to offset these concerns and lead the tech giant’s quarterly earnings growth,” they add.
\Samsung is closely followed by China’s Alibaba and Tencent. After pressure from the Beijing government on national technology companies, Alibaba’s performance has so far remained negative during the year, falling by 8%. Analysts estimate a path of 29% , 5 percentage points more than for its most direct competitor, the American Amazon.
However, its net profits for this year are expected to be somewhat lower than those of 2020. In the case of its compatriot Tencent , although it registers an increase of 2% during the year, the expected path is close to 30% . But as in the case of Alibaba, analysts expect it to reduce its net profit by more than 7% in 2021.
Finally, Taiwan Semiconductor , the last of the Asian leaders in potential within the category of heavyweights in the market, shows an advance of 11% in the last semester and a rise of 26% is still expected at 12 months . The world’s largest semiconductor manufacturer consolidates its reign in a context in which the crisis due to the shortage of these materials leaves the industry in a more vulnerable position. All in all, by 2021 analysts estimate that their profits will increase by 15%.
Americans are left behind
The most valuable firms in the United States also have upside potential, but this is lower than in Asia. The one that comes closest to them in that sense is Amazon . The analysts that FactSet gathers calculate an upward trend of 24% for the online trading firm . In addition, it has the best buy recommendation of the group of the ten largest by capitalization.
With a potential of double digits, but not exceeding 15%, appear the titans of Silicon Valley: Apple , Alphabet and Facebook . The Cupertino company stands out, for which analysts expect an advance of almost 15% for the next 12 months. In the case of Google’s parent company and Mark Zuckerberg’s firm, it would be 14% and 11%, respectively . The three also with advice on their actions to acquire.
For Microsoft, the short-term rise would be slightly over 9% . In your case, experts also believe that it is time to buy. Tesla , however, becomes the only one with a recommendation to hold and with the lowest potential among its peers, just over one percentage point .