Asia’s Leading Firms and Why Traders Invest in Them
Savvy financial investors want to trade shares in the biggest Asian corporations. One metric they should consider when hunting undervalued and overvalued stocks is brand value.
Branding is influential in our buying decisions; even though many don't want to admit it. Brand strength is an important trading signal. It is capable of demonstrating the short and long-term health of a business.
Last year, Statista revealed the top ten corporations in Asia in terms of brand value. Multinational conglomerate Alibaba was ranked first with a brand value worth $131.25 billion.
It was followed closely by Tencent ($130.86 billion). Meanwhile, China Mobile was ranked a distant third ($39.32 billion). At face value, what this appears to show is that the digital economy in the Far East continues to reign supreme.
Brand Value Makes For «Hot» Stocks
Many of these global tech giants are hot property when it comes to the stock markets. That’s why retail traders prefer to trade the share prices of Alibaba, Tencent and other tech firms using contracts for difference (CFDs).
But what exactly is CFD trading and how does it work? CFDs are instruments that move up and down with the price of the underlying assets. You can trade these without having to physically own stocks. It’s an opportunity to profit when assets gain and lose value by going long (buy) or short (sell).
Leading Brands
There are various ways in which retail traders place a value on a leading brand like Alibaba or Tencent. First, it is based upon consumer familiarity. How much is the corporation a household name?
The value is then measured through its appeal and customer retention figures. How content are consumers with a brand’s services? Does the future look bright for its emerging services and product development?
Employee retention is another key indicator of a brand’s value. Does a brand have a reputation for nurturing and attracting top tech talent?
What to Expect From Alibaba and Tencent in 2020
Alibaba is one of the most influential stocks in the Asian markets. This is due to its dominance in the continent's e-commerce sector. It has been a clear indicator of the global impact of the coronavirus pandemic.
At the turn of the New Year, Alibaba’s share price fell, and its weakness was a sign of what was to come. Interestingly, since the end of March, the value of Alibaba has rebounded by over 15 percent. The brand’s impressive conversion of 41 percent of its revenues into free cash is another indicator that's solidified its brand value.
Put to the Test
On the flip side, the brand value of Tencent has been hit by the ongoing coronavirus storm. Tencent’s fintech arm is underpinned by its mobile wallet service WeChat Pay.
It is currently experiencing reduced consumer demand due to greatly reduced store transactions. Its gaming division remains popular. Yet, that popularity is being put to the test by the rise of ByteDance.Owned by TikTok, ByteDance is now fully licensed by Chinese mobile gaming regulators. It's possible this could end Tencent’s gaming monopoly in the long term.
China Mobile's Quest for 5G Roll-Out
Third-placed China Mobile is likely to have a major say in the Chinese mobile industry this year. The firm recently dished out 5G base stations to the likes of Huawei and ZTE.
It promises to have a leading role in underpinning the 5G connectivity ambitions of the Far East, enhancing its brand value as an innovator.
