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JPM’s Ogoshi backs tech & finance's 'revolutionary' partnership

JPM’s Ogoshi backs tech & finance's 'revolutionary' partnership

Mobile payment is only the beginning of how finance and technology can combine to revolutionise business models across industries.

That is according to JPM’s Aisa Ogoshi, who runs the JPM Pacific Equity fund alongside Mark Davids and Robert Lloyd.

Speaking to Citywire Selector, + rated Ogoshi, who currently has 27.0% of the fund allocated to financials and 25.9% allocated to IT, said the partnership of the two sectors could give both areas a boost.

'The emergence of technologies like Blockchain will further speed up the cooperation between banks and technology institutes to develop competitive edges in their respective industries.

'There are an increasing number of payment processing, investment and settlement platforms that pose threats to incumbents in the industries.'

However, Ogoshi, who currently has 5.9% of the fund allocated to internet company Tencent, said the growth of financial payments could prove both advantageous and disruptive to the financial sector.

'Companies such as Tencent are disintermediating financial services through direct ‘consumer-to-consumer’ payments.

'But there is a clear and gradual move away from cash transactions in both developed and emerging economies, so there is ample scope for increasing use of mobile payment applications.'

Despite Tencent tumbling 13% from its September figures - eliminating $35 billion of the value of its shares - Ogoshi believes the company will come out on top.

'Tencent corrected from September but still finished the year up 33%. We see their positioning in gaming, video, music, payment and cloud computing as very strong, with a growing user base which they are gradually monetizing.'

Promising results

Ogoshi currently has 5.7% allocated to industrials and highlighted companies such as Keyence, where she has 2.5% of the portfolio allocated, as a company which could do well for the fund in 2017.

'Our investment philosophy and process is focused around high-quality companies such as Maruti Suzuki in India (auto and motorcycle manufacturer) and Keyence in Japan (global automation manufacturer) which performed very well over 2016.

'Despite shorter-term high valuations for both of these companies, they delivered strong underlying results and continue to take market share in their respective industries.'

Ogoshi has 7.1% of the fund allocated to materials, but noted steel as one area of the market the team would be shying away from this year.

'Steel is one sector that we remain underweight in – our view is that there is plenty of overcapacity of steel in Asia.

'The incoming Trump administration do not need congressional approval to erect trade barriers, which could negatively impact companies that export a high percentage of their production.'

The JPM Pacific Equity fund, returned 4.74% in US dollar terms over the three years to the end of December 2016. This compares with a 3.74% rise by its Citywire-assigned benchmark, the MSCI AC Asia Pacific TR USD, over the same time period.

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