T. Rowe Price Asian Opportunities Equity

Investment process

Eric, with the help of the analyst team, seeks out high-quality businesses that will reliably compound earnings and sustain strong cash flow over time. These companies tend to be established companies, with leading market positions and good management teams who prioritise shareholder returns. He looks for returns-focused capital allocation and prudent balance sheet management.

An initial quantitative screen focuses on quality and valuation. Then detailed company analysis is undertaken. The team visits companies to enhance its understanding of the company’s operations. These visits are key to enabling it to make independent judgments about the commitment, skills, and resources the company commands.

Eric also looks at the industry in which the company operates, analysing its structure and outlook. The team examines a company’s pricing power, product cycles, market share trends, margin outlook and leverage. Importantly, it assesses if management cares about shareholders and has high corporate governance standards. To supplement the team’s assessment of ESG risk factors, external research partners are used to provide detailed company-level reports.

Once these high-quality compounders have been identified, valuation is assessed. Various valuation criteria are applied to each company, depending on which sector it operates. Valuation is assessed relative to local or global sector peers, as appropriate.

Whilst the bottom-up assessment is crucial, top-down factors are also taken into account. The team looks at political stability, government policies, national accounts, central bank policy and currency stability, to name but a few things. Eric then constructs a portfolio of 40-70 stocks from the bottom up, subject to liquidity constraints.