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We believe Asia tech is the future innovation hub of the world, offering a long runway for growth driven by technological disruption. The region is the population center of the globe, the backbone of tech’s supply chain and manufacturing and the home to a huge number of small tech companies offering exposure to key secular themes across industries.
In fact, Asia has over 1,000 smaller-cap tech companies, more than double that of North America and Western Europe combined1. We believe Asia tech therefore can offer a depth and breadth of opportunities that global tech typically cannot. After all, 70% of the world’s tech companies are in Asia but the region represents only 17% of the MSCI All Country World IT Index2.
In this Q&A, Yash Patodia shares his views on how best to access the massive and underappreciated Asia tech opportunity and profiles some potential risks for the sector.
Brian: Yash, you have a long history with disruptive tech. Tell us how that started and why innovation and disruption are so important to your investment style.
YASH: My background in tech began before I started investing in the sector. Out of university, I worked in the mobile phone division at a major US tech company which, at the time, produced the leading smartphone platform globally. I witnessed firsthand why a company needs to remain innovative, as our leading position got disrupted by a competitor that soon came to be synonymous with the smartphone market. The rug was pulled out from under us and we were unable to adapt. This experience made it clear how vital it is to understand the industry’s competitive landscape and for management teams to invest to stay ahead of competitors.
In my view, this innovative mind-set is as relevant now as ever before. The sector is ripe with opportunities powered by disruptive and innovative companies. I believe it is crucial to track these companies from an early stage in their growth journeys because disruption is…
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1This represents companies with under US$5 billion in market cap. Sources: FactSet, Wellington Management, December 2020. | 2Sources: FactSet, Wellington Management, MSCI All Country World IT Index. Data as of 31 December 2020.