Experience to opportunity: Fidelity’s 50-year journey in Asia and what investors can’t afford to miss
Fidelity has more than half a century of experience in Asia and investment director Gary Monaghan has plenty of insights to share.
This interview was filmed on 17 September 2025.
Despite its relative proximity, Asian markets aren't necessarily something that appears on the radar of Australian investors.
For Gary Monaghan, investment director at Fidelity International, the opportunity should be compelling just on the raw numbers.
"Asia is about 40% of the world's population, it's about 25% of GDP, it's half the world's growth today. And by 2040, it's estimated it'll be about 40% of GDP - so a big growth opportunity from a macroeconomic perspective.
"But we invest in markets, and the Asia equity markets today are only 9% of global markets. So even if there's a little bit of catch-up, there's a really, really strong tailwind to the long-term opportunity across the board."
For investors who perhaps haven't considered Asian markets before, there's now plenty worth paying attention to.
Asia has many strings to its bow, says Monaghan.
"Look at it for not just the growth, but the diversification as well. It does have its tech plays, but it's not as tech heavy, for example, as the US. It does have its resources plays, but it's not as resource heavy as Australia. And it gives you a real opportunity for the areas like consumption and for emerging trends that are coming through the region."
On China and India
The two economic powerhouses of Asia have experienced their fair share of ups and downs, but the forward outlook is promising if you know where to look, according to Monaghan.
"We're more constructive on China than we were 12 months ago," said Monaghan. "Yes, it's got its challenges. - the macroeconomic situation is not booming - but the worst is behind [us]."
"A lot of issues around the property market and the consumer have happened and we're just begrudgingly grinding upwards. And if you have "less worse" and cheap valuations, it often drives a rerating. So we are relatively more constructive on China."
One issue that is slowly being addressed is involution, or "nei-juan" as it's known in China.
"Involution is effectively entanglement," says Monaghan. "Whether its regulators, authorities or companies, there needs to be a greater push to stop that over-expansion that Chinese companies can sometimes be guilty of, and to stop undercutting each other."
He points to electric vehicles as a great case in point.
"Electric vehicles in China - they're very good - but they're just building them in massive volume and they're competing on price," said Monaghan.
"So you've got a great volume opportunity, but margins are being compressed because everyone's battling for and undercutting each other. So this sort of anti-involution is around companies and authorities and policy makers getting together to really sort of make a more rational competitive environment."
On India, frothy valuations are starting to subside.
"We were very concerned 12 months ago on valuations," says Monaghan. "Great long-term story, but it was way more expensive than even the US."
"In recent quarters, share prices in India have started to de-rate a bit. Earnings expectations are coming down, which is good. And so, increasingly finding a few sporadic opportunities in India."
On AI
While Fidelity Asia Fund owns many of the big names in Asian AI, namely TSMC (TPE: 2330) and Samsung (KRX: 005930), Monaghan sees a further opportunity in the companies that have the status and strength to drive revenue from AI.
"Very few companies have been able to actually demonstrate how to monetise AI adoption," he says. "So you're looking through the companies and understanding some of the Chinese companies in the internet space, like a Tencent as an example, are big enough. They're smart enough, they've got the big enough ecosystem and data platforms that they need to use AI to better connect its customers to advertisers."
"Not everyone can do that. So for us in the AI space, it's the enablers, but stick with the ones that are the market leader and are here to stay like TSMC."
Years on the ground
Fidelity has been on the ground in Asia for more than half a century and its Asia Fund is now in its 20th year. Monaghan himself has been part of Fidelity's Asia strategy, and based in Hong Kong, for 13 years.
Over that period, the strategy has evolved alongside the opportunity set.
"In terms of the broad opportunity, it's always been about capturing that Asia growth story, but of course that changes country to country. And the Chinese growth story from 15-20 years ago around infrastructure is not the growth story of the next 15 years."
One of the biggest decisions was a deliberate effort in 2014 to make the fund more concentrated.
"There was a lot of doubt that you could make a concentrated portfolio in emerging markets, and relatively volatile markets, work," said Monaghan. "And I think the last 12 years or so have proven that we've been somewhat successful in being able to do that."
One high conviction bet that paid off handsomely was Kweichow Moutai Co. Ltd (SHA: 600519), producer of Maotai liquor. The spirit was traditionally gifted to businessmen, putting it out of the price range of everyday people.
A big anti-corruption push saw the share price tank as corporations stopped the practice of gifting it. It presented an opportunity for Fidelity, which could draw on their local expertise.
"We took a step back and said, there's heritage to this brand within China," said Monaghan. "It is a staple brand."
"And as the corporates were maybe stopped gifting it to each other, it would get to a price point... where consumers who had been desperate to get their hands on it could suddenly start to get their hands on it. And with that, we saw the business model change from a business-to-business to a business-to-consumer."
They recently exited the rest of their decades-long position after the stock had risen more than 10 times.
Key to their success has been a widespread "boots on the ground" network. It means Fidelity can identify the best-in-class companies in the region.
"You see what could be optically on the ground - good companies and a good opportunity - but you take a step back and there might actually be better companies elsewhere in the world," says Monaghan. "It's about using the team on the ground to feed in the opportunity set and highlight the ideas."
"The numbers and the anecdotes don't always match up. You see the numbers, but you get the anecdotes from the team as well and it can really help clarify the thesis and to connect the dots."
Make investing in hard-to- research markets easy
Gary and the team search for the best companies in Asia, so you don’t have to. With 50+ years’ investing in Asia and insights from their on-the-ground analyst team, the Fidelity Asia Active ETF (ASX: FASI) can make your smart decision, even smarter. Learn more here.
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Tom is a Content Editor at Livewire Markets, having worked as a writer and editor for 10 years, specialising in investing and personal finance.
He has previously worked at Finder, FourFourTwo and Man Of Many covering everything from film to football.
He has a Masters in Media Production and a Bachelor's in Journalism.
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Tom is a Content Editor at Livewire Markets, having worked as a writer and editor for 10 years, specialising in investing and personal finance. He has previously worked at Finder, FourFourTwo and Man Of Many covering everything from film to...
Expertise
Tom is a Content Editor at Livewire Markets, having worked as a writer and editor for 10 years, specialising in investing and personal finance. He has previously worked at Finder, FourFourTwo and Man Of Many covering everything from film to...
Expertise
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