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Sohn Hong Kong's top hedge fund picks include Indian pharma and China robotaxis

At the Sohn Investment Conference in Hong Kong, hedge funds shared their best investment ideas. These ranged from Chinese self driving taxis to an Indian drug retailer and a Korean nuclear power plant builder.

The geographical diversity of this year's selections is greater than last year. This suggests that investors are actively trying to diversify their exposure in order to combat tariff uncertainty and market volatility.

Flight Deck Capital, based in San Francisco, sees potential upside for Baidu's auto-driving division.

Jay Kahn, Flight Deck's managing partner and founder of Flight Deck, said that Apollo Go is similar to Google's self driving unit Waymo. "It's the only robo taxi player in China who's not reliant on capital markets for scale," he added.

He predicts that China's ride-sharing and taxi industry will grow to $237 billion in 2034. Apollo is expected to take a 15% share of the market. He said that the market currently values this segment and Baidu's cloud services at zero.

Investor optimism about Chinese companies going overseas is not affected by the escalating U.S./China trade war.

Apeiron Capital, Hong Kong's investment bank, has endorsed Chinese ride-hailing service DiDi Global. It cited its improved margin at home as well as its rapid market share growth in Latin America. Triata Capital, meanwhile, is optimistic about Chinese discount ecommerce player PDD (owner of Temu).

The monthly active users of Temu are bigger than Amazon's, according to Triata CIO Sean Ho.

Two investors are interested in India's healthcare sector.

Arisaig Partners, a Singapore-based investment firm, favors MedPlus Health Services, a leading Indian pharmacy chain, because its private label products enhance its low price proposition and widen the gap between it and its competitors.

"Inflation has dropped, the government is focusing more on the middle-class and consumer spending has risen from a low base. In an interview conducted before the conference, Vatsal mody, partner at Arisaig Partners and head of India Research said that he believes this is a time when consumer spending will improve.

Panvira Management, an India-based hedge funds startup, is bullish about Piramal Pharma. It expects its growth to reach the high teens as well as benefiting from normalised tax rates.

SECURITY AND A ACTIVISTS

Other hedge funds are focusing on the opportunities created by geopolitical conflict in the security industry.

Jon Jhun who manages MY.Alpha Management’s new Korea-focused funds chose Hyundai Engineering & Construction, which is engaged in nuclear plant design, procurement, and construction.

He said that "Korea dominates ex-Russian and ex-China's nuclear supply chain."

Frontline Global Management, a Hong Kong-based company, chose the Spanish defense firm Indra Sistemas in the belief that it will win more European contract.

Palliser Capital, a UK hedge fund, disclosed at the event that it owned a 3% stake of Japan's Toyo Tire. The hedge fund urged the tire manufacturer to increase shareholder returns by setting an "best-in class" performance target, and to release its excess capital, which amounts to about $900,000,000, to shareholders.

Seth Fischer’s Oasis management is long Japanese entertainment chain Round One. It believes it will receive a higher rating as it enters the restaurant business, aiming to bring Michelin quality Japanese food to the U.S.

(source: Reuters)