Is Southeast Asia ‘the next big thing’? Not as such, but… Gabriel Sacks is Co-Manager of Aberdeen Asia Focus sees opportunities emerging.
Finding “the next big thing” is every investor’s dream. For most, of course, the idea remains precisely that – a dream. The reality is that truly spectacular investments are few and far between, to say the least.
More often than not, it is rather more practical to instead seek out investments that are likely to perform well over time. Long-term growth stories tend to prove more reliable than purported opportunities that promise to “shoot the lights out” in stunningly short order.
There are many companies that fit this bill in Asia. India was arguably the principal source of them last year, whereas China, Taiwan and South Korea have served up more than their fair share in 2025.
Looking ahead, my team and I believe Southeast Asia is becoming more attractive – particularly from a valuation point of view. It has largely lagged during the past couple of years, yet there are encouraging signs that it is “warming up”.
Discussed below are several businesses that highlight why we are increasingly optimistic about the region’s prospects. These companies are diversified across countries, industries and sectors, but there is one significant aspect that unites them: their size.
Specifically, each can be found towards the lower end of the market-capitalisation spectrum. This underlines an important point for investors determined to unearth “the next big thing”: even if there really is such a phenomenon, the chances are that it would have to start out small.
Century Pacific
Political instability and other broad-brush issues are widely perceived as barriers to investing in emerging markets (EMs) anywhere in the world. They can certainly be factors, yet many companies are able to survive and thrive in spite of a challenging backdrop.
Take Century Pacific. It is a family-owned branded food business in the Philippines, a country that is routinely plunged into political turmoil and which has only recently witnessed civil unrest over alleged government corruption.
Many of Century Pacific’s top executives, including its chairman and CEO, studied at prestigious academic institutions in the US. This has given the business a determinedly entrepreneurial outlook and a sharp focus on sustainability and governance.
In turn, such attributes have helped the company see off a succession of would-be rivals – numerous multinationals among them – and maintain its domestic dominance. The Philippines might be politically brittle, but Century Pacific continues to go from strength to strength.
Thai Life Insurance
Arguably even more so than the Philippines, Thailand has made political crisis something of a way of life. Much of its history since the Siamese Revolution of 1932 has has been punctuated by rebellions, coups and dissolutions.
Even in the face of such tumult, though, the best businesses can still flourish. Thai Life Insurance (TLI), one of the country’s leading life insurers, is a good example.
Founded in 1942, TLI was the first Thai-operated business of its kind. It has built a strong agency network and is now able to compete with major players such as AIA, which is based in Hong Kong.
The next phase in TLI’s growth story is likely to come from an expansion of its range of protection products. The business already pays a healthy dividend and comfortably exceeds its capital requirements.
PT Bank OCBC NISP
It is little more than a decade since a Morgan Stanley analyst coined the term “Fragile Five” to describe a group of EMs thought to be at grave risk from their heavy reliance on foreign investment. Indonesia was a member of the hapless quintet.
Things have changed somewhat since then. Drawing on an abundance of natural resources, a sizeable young population and a burgeoning middle class, Indonesia is now steadily establishing itself as one of Asia’s economic powerhouses.
Having repeatedly demonstrated its resilience, PT Bank OCBC NISP is one of the longer-term success stories. Its majority shareholder is Singapore’s OCBC Bank, which is itself known for its cautious outlook.
OCBC NISP has emerged unscathed from several market shocks over recent decades. These have included the Asian financial crisis and the ups and downs of President Suharto’s 31 years in office. It has not grown as rapidly as some of its peers, but it has quality of assets and a dependable dividend income stream on its side.
FPT
Perhaps no Southeast Asian country illustrates the region’s potential more than Vietnam, which is still a frontier market and a one-party socialist republic. It might not sound like an obvious investment destination, yet it regularly outperforms its neighbours.
One key reason for its success is the standing of Asia’s other one-party socialist republic. China was once acknowledged as “the workshop of the world”, but the restructuring of global supply chains – most notably in the form of “China plus one” and “China plus two” strategies – has handed Vietnam a claim to the title.
IT provider FPT has clearly benefited from this shift. The company provides software services to domestic and multinational clients and has especially strong links with Japan, which is notoriously reluctant to engage with China when outsourcing.
Underscoring a firm commitment to innovation, FPT is now responsible for graduating around a third of all Vietnam’s engineering students. Like many Asian smaller companies, it may not be “the next big thing” per se – but it still merits investors’ attention.
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