Bualuang Fund announces investment theme for 2020

Stocks and Financial Services Press Releases Tuesday February 25, 2020 15:25
Bangkok--25 Feb--Bualuang Fund
BBL Asset Management Co Ltd has announced "Broad Network Coverage, Corporate Strength and Sustainability" as its investment theme for 2020.

Peerapong Jirasevijinda, CEO of BBL Asset Management Co Ltd, (Bualuang Fund) said since 2012 the company has been issuing its investment theme annually as a conceptual framework to help investors understand the risks and opportunities of the future trend affecting their investment decisions.

As for this year, Peerapong said the investment theme reflects Bualuang Fund's views that companies that have built up a strong operational network and database, with extensive coverage of goods and services available to meet the consumers' needs, are likely to succeed or outperform their competitors in the marketplace.

He added that Bualuang Fund's investment theme also highlights an important trend in the growing adoption of ESG (Environment, Social and Governance) among companies worldwide, which still stand to reap the reward from the sustainability-conscious consumers and investors.

"This year's investment theme may be seen as a follow-up on last year's theme of Logistics and Infrastructure Solutions, which remains in our playbook as Bualuang Fund moves forward to serving our clients and investors to the best of our knowledge and capability," said Peerapong.

Bualuang Fund believes that technology is advancing at an exponential rate, making it necessary for businesses to adopt new innovations or constantly adjust their operations to cope with the changing business environment otherwise they will become irrelevant. New businesses are propping up all the time and they are transforming the business landscape in a big way.

Bualuang Fund also views that the Internet is the main driving force behind the change, creating dramatic disruptions across the broad spectrum of all industries. But making Internet-related investment alone may not be the answer for businesses in the long term since fresh start-ups or new companies with innovative ideas will come along to challenge the existing establishment. Neither is it a guarantee of success by pouring money into marketing and promotional campaign alone in an increasingly unpredictable business environment.

In the age that the consumers hook up online day in and day out, companies that have a broad network coverage and database are most likely to succeed by taking the advantage of the "connected consumers".

Through their platforms and network of business allies that can reach out to the mass consumers, companies can display or distribute a whole range of their goods and services more conveniently and effectively to meet the needs of the consumers. The database also helps companies to learn and to know the behaviors of their customers – their tastes and preferences, their spending power, their lifestyles.

Information search from online shopping creates digital footprints that help companies to track the consumers and learn about their interest even before they make any purchase. The traffic or the frequency of the consumers searching for information or making the transactions online, with peer reviews and comments, will further enhance the prospects of the businesses that have broad network and database coverage. Many companies are investing massively in AI to improve their business operations and help them to target the customers even more precisely.

On the contrary, physical retailers can hardly know their customers or at best have only a superficial insight into their behaviors manifested within a limited retail space.

Many big companies involved with the online technology are trying to create an even larger network by teaming up with new partners, which is the fastest route to expand the business. For example, Alibaba and Tencent, both Chinese gigantic companies, have a variety of services made available on hand through their own business and their allies to serve their customers via their platforms or applications, not only in online shopping, watching movies, listening to music, but also in booking holiday trips or making investment. Key to their success is their payment applications, which help facilitate the transactions in the most convenient, reliable and effective manner.

At the same time, Amazon is another company that relies on its platform such as Amazon Prime to provide sophisticated one-stop service for its customers. This not only helps improve customer satisfaction but also maintains their loyalty.

In Thailand, Peerapong said we are beginning to see many companies moving along this line of expanding growth by developing the platforms of the existing businesses to cope with the growing competition. Many shopping malls or department stores are providing a mixture of offline and online features, known as Omni Channel, to plug the loopholes in the consumer spending and at the same time improve the competitiveness of the retail business. They have also seriously been looking for clues in big data analytics to understand their customers' behaviors. Lazada and Shopee, both market leaders in online shopping or e-commerce, are expanding their channels to strengthen their operations by going back to the offline feature and teaming up with business allies to allow customers to pick up the items they purchase at the participating outlets.

Peerapong also said corporate strength goes hand in hand with sustainability. Apart from the size of the business and the network effects, another important factor that will enhance the competitiveness of companies is the ESG concept. Governments and companies all over the world are embracing ESG as a way of doing business going forward. Companies that enjoy good business and command a strong sense of customers' loyalty may face a bleak future if the public become suspicious of their failure to stick to an acceptable ESG standard.

"Investment that places an emphasis on ESG is becoming a global trend. MSCI used to do a survey and found that companies that achieved a high score on ESG offered higher shareholders' return or higher investment return in the long term when compared to those with lower ESG score," he said.

"Likewise in the capital market, we have also found that companies with ESG substandard normally face a downgrade of their stock prices when compared to those of their peers in the same industry. Overall, the stock prices of companies facing ESG problem might look cheap but there is no guarantee that they will perform well in the future," Peerapong added.

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