Eastspring Investments
May 2024 | 2 min read
01
India
India is increasingly becoming a key supply chain location for manufacturers due to cheap labour supply and production incentives offered across 14 sectors to build domestic manufacturing champions. The automotives sector in particular is seeing
investments from mining to assembly.
Note: With expanding opportunities across sectors, India is an attractive investment destination with growing weight in the MSCI EM Index (from 8.3% in Aug 2020 to 17.7% in Mar 2024)1.
02
ASEAN
ASEAN will remain one of the world’s fastest-growing regions due to favourable demographics, increasingly skilled workforce and expanding trade connectivity. ASEAN, a key beneficiary of the China plus one strategy, recorded an all-time high
of foreign direct investment inflows of USD224bn in 20222. The region’s electronics and automotives sectors are significant recipients.
Note: Indonesia and Thailand are players in the electric vehicle supply chain with Indonesia involved in all stages of this chain, while Malaysia is a successful chip testing and assembly centre for semiconductors.
03
Japan
Supply chain security and reshoring continue to be key priorities for the current government. Reshoring efforts are seeing increased capital expenditure spending by semiconductor companies, thereby benefitting equipment suppliers. As more companies
reshore, there will be a positive knock-on impact on the domestic economy in the long term.
Note: Since 2020, there is a USD2 billion fund to support companies in reshoring their supply chain back to Japan. Other policies include subsidies, tax breaks and regulatory reforms.
04
Mexico
The country is a key nearshoring partner for North American businesses due to its geographical advantage, robust manufacturing capability, low labour costs and important natural resources.
Note: Mexico benefits from the United States-Mexico-Canada Free Trade Agreement and the US Inflation Reduction Act. The US and Canada are Mexico’s first and fifth largest trading partners3.
05
Emerging Europe
Countries such as Poland, Hungary, Czechia, and Turkey have competitive manufacturing bases and will benefit from nearshoring by companies from developed Europe. Emerging Europe is becoming a regional sourcing and production cluster for the European
automotives, and the pharmaceuticals and medical equipment sectors.
Note: Emerging European countries offer cost-effective production options for labour-intensive processes. European Union incentives are helping battery and battery component makers.
06
South America
South America has some of the world’s largest reserves of critical minerals that are essential for the electric vehicle and renewable energy sectors. The revenues from the production of these minerals are likely to increase by 50% in 20304 and boost the economies of countries in the region.
Note: More than half of the world’s lithium reserves are located in Argentina, Bolivia, and Chile. Furthermore, the region holds some 40% of the world’s copper reserves (mainly in Chile, Peru)5
Read our whitepaper: “New anchors reshaping supply chains: Opportunities for investors” to learn about the investment strategies that can exploit the benefits from the supply chain rebalancing theme.
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Interesting reads
Sources:
1 MSCI Emerging Markets Index
2 https://www.aseanstats.org
3 https://www.brookings.edu/articles/mexicos-priorities-for-uscma-in-2022/
4 IEA’s Latin America Energy Outlook 2023
5 https://atradius.sg/reports/economic-research-lac-critical-minerals-february-2024.html
Singapore by Eastspring Investments (Singapore) Limited (UEN: 199407631H)
Australia (for wholesale clients only) by Eastspring Investments (Singapore) Limited (UEN: 199407631H), which is incorporated in Singapore, is exempt from the requirement to hold an Australian financial services licence and is licensed and regulated by the Monetary Authority of Singapore under Singapore laws which differ from Australian laws
Hong Kong by Eastspring Investments (Hong Kong) Limited and has not been reviewed by the Securities and Futures Commission of Hong Kong.
Indonesia by PT Eastspring Investments Indonesia, an investment manager that is licensed, registered and supervised by the Indonesia Financial Services Authority (OJK).
Malaysia by Eastspring Investments Berhad (200001028634/ 531241-U) and Eastspring Al-Wara’ Investments Berhad (200901017585 / 860682-K).
Thailand by Eastspring Asset Management (Thailand) Co., Ltd.
United States of America (for institutional clients only) by Eastspring Investments (Singapore) Limited (UEN: 199407631H), which is incorporated in Singapore and is registered with the U.S Securities and Exchange Commission as a registered investment adviser.
European Economic Area (for professional clients only) and Switzerland (for qualified investors only) by Eastspring Investments (Luxembourg) S.A., 26, Boulevard Royal, 2449 Luxembourg, Grand-Duchy of Luxembourg, registered with the Registre de Commerce et des Sociétés (Luxembourg), Register No B 173737.
United Kingdom (for professional clients only) by Eastspring Investments (Luxembourg) S.A. - UK Branch, 10 Lower Thames Street, London EC3R 6AF.
Chile (for institutional clients only) by Eastspring Investments (Singapore) Limited (UEN: 199407631H), which is incorporated in Singapore and is licensed and regulated by the Monetary Authority of Singapore under Singapore laws which differ from Chilean laws.
The afore-mentioned entities are hereinafter collectively referred to as Eastspring Investments.
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