Navigating the Evolving Climate Impact Landscape

July 1, 2024

BY Milltrust International Group

Climate Impact Asia Fund’s Strategic Insights and Market Movements

As we navigate the complex and dynamic landscape of Asia’s markets, the Climate Impact Asia Fund (CIAF) remains committed to identifying and capitalising on key trends that drive sustainable growth. Our latest portfolio adjustments and strategic insights reflect our dedication to fostering long-term value in the face of evolving economic and environmental challenges.

China’s Housing Market: A Slow Recovery

China’s property developers are facing a challenging environment, with June figures expected to contract another 30% from an already low base in 2023. Despite fresh stimulus efforts, housing demand has yet to show significant revival. This slow recovery underscores the broader issue that shifts in consumer behaviour and mindset take time. Within our portfolio, Xinyi Glass is positioned to benefit from the eventual rebound in China’s construction sector, leveraging its strong presence in the float glass market.

Automotive Sector: Toyota’s EV Ambitions

Toyota is set to launch its first electric vehicle (EV) model with an assisted driving system in China by 2025, in partnership with Guangzhou Auto. This move will add more competition to the already crowded EV sector in China. While it remains uncertain how much Toyota will benefit from this venture, the introduction of new technology and increased competition could stimulate innovation and consumer interest in the sector, creating potential ripple effects across the market.

Strategic Moves in Water Management

In the Philippines, Trident Water has increased its stake in Manila Water by 23%, making it the largest shareholder with 57%. This strategic acquisition could potentially lead to a buyout, enhancing Trident Water’s influence and operational capacity in the region. As water scarcity becomes a critical issue globally, investments in water infrastructure and sustainable management practices are paramount.

Breakthrough in Battery Technology

TDK has announced a significant breakthrough in solid-state battery technology, developing a material with approximately 100 times higher energy density than existing products. This innovation, aimed at applications in wireless earphones, smartwatches, and other wearable devices, represents a major advancement in the battery sector. While the earnings impact is yet to be quantified, this development positions TDK at the forefront of battery technology, potentially driving profitability and market expansion.

Portfolio Adjustments and Market Movements

Recent portfolio movements highlight our proactive approach to market dynamics. We sold our position in Daio Paper, a hedge against a stronger yen, following the Bank of Japan’s decision to maintain its loose monetary policy. We initiated a position in a Chinese glass maker, benefiting from China’s property ownership relaxation. Additionally, we booked profits on Takasago Thermal due to less optimistic guidance for the coming year.

Addressing Water Stress and Climate Change

Water stress remains a critical issue, with regions like Australia, China, and Indonesia facing medium to high stress levels by 2050. The increasing demand for water, driven by population growth and industrial activities, exacerbates this challenge. At CIAF, we are committed to investing in companies that provide clean water solutions, addressing both current and future water scarcity issues. Effective water management and infrastructure investments are essential to mitigate the impacts of water stress on industries and economies.

As we continue to navigate these evolving markets, our strategic insights and portfolio adjustments aim to leverage emerging opportunities while addressing critical environmental challenges. The Climate Impact Asia Fund remains dedicated to driving sustainable growth and long-term value for our investors.

Categories: News