Stock selection key to traversing US/China trade tensions

Posted on: October 9th, 2019

Category: News

Media Release – Stock selection key to traversing US and China trade tensions

Opportunity often arises from what appears to be volatility and uncertainty and that is emerging as the case for investors as they scan the horizon beyond the current US/China trade war.

Trade wars do many things, but they do not slow the march of technology and that is why Premium China Funds Management (PCFM) has been closely monitoring and investing in Taiwan Semiconductor Manufacturing Co. (TSMC).

The reasons for PCFM’s interest in TSMC is that it neatly straddles a number of the dynamics unaffected by the trade war:

  • It is focused on delivering the semiconductor underpinnings of compelling 5G technology;
  • It is Taiwanese-based and therefore not fully exposed to the trade tensions;
  • The company commands a strong regional market position.

Explaining Premium China Fund’s analysis, PCFM’s executive director and Chief Investment Specialist, Jonathan Wu said the simple facts of the matter were that neither the US nor China could afford to ignore the realities when it came to technology, particularly 5G.

“The trade war developments mean that China has felt the need to accelerate semiconductor development and we believe TSMC is going to be a major beneficiary of that strategy given its technology leadership in chipset manufacturing,” he said.

Wu said the fundamentals for TSMC were compelling in circumstances where it was well-acknowledged that 5G requires more semiconductor components per device for faster speed and higher computing than 4G.

“Knowing that, we expect this increasing per-device silicon content to fuel TSMC’s revenue growth momentum in the coming years,” he said.

Wu said that beyond the technological factors, TSMC represented a solid company which had consistently delivered 20-30% ROE and had increased its cash dividend payout throughout cycles.

“All in all, we believe our exposure to TSMC reflects the value of having made a pragmatic assessment of what is happening in terms of the US/China trade war dynamic and the opportunities that continue to exist notwithstanding that uncertainty,” he said.


Premium China Funds Management (PCFM) is a boutique funds management group providing specialist Asian equity and fixed-income funds to both Australian and New Zealand investors.

Capturing the growing economies and influence of emerging Asia, PCFM has developed 4 actively managed funds – the Premium China Fund, Premium Asia Fund, Premium Asia Property Fund and Premium Asia Income Fund.

The funds are managed by a large and experienced team with offices in Hong Kong, Shanghai, Singapore and Kuala Lumpur. The directors and investment managers of Premium and its fund offerings have extensive knowledge in Asian equity and credit markets, wealth management, and other financial services.

For further information, please feel free to contact:

Jonathan Wu – Executive Director | Chief Investment Specialist
0416 031 676

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Phone: +61 2 9211 3888

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