Asia’s ‘Value Up’ Strategy: A Defense Against Trump’s Trade Policies and a Boost for Corporate Growth

Governments and regulators across Asia are adopting Japan's "Value Up" strategy to improve shareholder returns and corporate governance. Originally implemented a decade ago, the approach has driven Japan’s Nikkei 225 to record highs this year, spurring regional interest.

The timing appears opportune for investors. Donald Trump's recent election victory and his adversarial trade policies pose a potential threat to Asia's economic growth and corporate earnings. However, the "Value Up" initiatives in the region offer a strategic defense against these challenges.

Sat Duhra, a fund manager at Janus Henderson Investors in Singapore, sees corporate reform as a major opportunity in Asia. “When I present to my clients, I tell them that there are five great themes in Asia, and one of them is corporate reforms to enhance shareholder returns,” he explains.

In South Korea, the government launched its own “Corporate Value Up” programme in February 2024 to address the "Korea discount" and improve valuations. However, results have been mixed, with the Kospi index down more than 7% this year.

India has also embraced reforms under Prime Minister Narendra Modi, directing state-owned enterprises (SOEs) to increase dividends and efficiency. These changes have boosted SOEs’ market capitalisation to its highest level in six years.

Fund managers like Vikas Pershad of M&G Investments Singapore praise these initiatives as timely and beneficial. “This is a good example of how more regulation can be helpful, and I am optimistic,” he states.

In Singapore, a government task force is reviewing ways to enhance market valuations. Mohit Mirpuri from SGMC Capital highlights the potential benefits, noting that “encouraging companies to narrow the price-to-book gap signals a stronger commitment to market efficiency and investor trust.”

Meanwhile, Vicki Chi of Robeco in Hong Kong is actively positioning portfolios to capture value-up opportunities. She emphasises, “It’s very important for investors to notice and to look for those opportunities because after we talk about macro, it’s about companies delivering on earnings and improving returns.”

Despite challenges, Asia's "Value Up" movement offers hope for stronger corporate governance and improved investor confidence across the region.

Original article written by Bloomberg, published in South China Morning Post (SCMP).

Read more here, or download the PDF below.

Rush to ‘value up’ may be Asia stocks’ best defence against Trump _ South China Morning Po.

Download • 3.54MB