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Photographer: Eduardo Leal/Bloomberg Photographer: Eduardo Leal/Bloomberg

Southeast Asian stock markets still have “selective investment opportunities” even though Wall Street is ignoring them, according to JPMorgan Asset Management.

The money manager, which has about $3 billion invested in the region’s equities, says tourism shares are one example, particularly in Thailand. The country is seeing more visitors from a wider range of nations, according to Pauline Ng, one of the managers of the funds.

“Tourism is a very big part of Asean,” Ng, 45, said in an interview in Singapore. “Thailand has always been benefiting from that but now we are also seeing Indian tourists going to Thailand, not just the Chinese tourists. And slowly we are also seeing places like Vietnam, for example, and the Philippines, benefiting from tourists in the region.”

Southeast Asia was home to six of the top 20 locations by number of international visitors in Mastercard Inc.’s Global Destination Cities Index last year. Three of them -- Bangkok, Phuket and Pattaya -- were in Thailand. And the Thai capital topped the list for the sixth time in seven years.

Visitors to Thailand rose to a record 38.3 million in 2018, according to the country’s tourism ministry. JPMorgan’s bullishness on Thai tourism comes even as an industry body says the strengthening baht is an impediment to wooing more holidaymakers.

Baht appreciation is a valid concern, but the cost of holidaying in Thailand is “still in general a lot lower” than Europe, Japan and South Korea, Ng said.

Airports of Thailand Pcl is one of the money manager’s stock picks, Ng said. Shares in the operator of airports in Bangkok and elsewhere in the country have rose 23% this year through Thursday’s close, and surged more than fivefold since early 2014.

“As bottom-up stock pickers, we don’t invest only on the basis of a top-down story,” Ng said. “If we take Thailand as an example, tourism would lead us to think about hotels or airports. However, hotels are facing an oversupply situation and growth in tourism is now value-oriented travelers. If we look at the airports, there is just one hub, no matter the class of travelers.”

Medical Tourism

Medical tourism is another promising area, she said. JPMorgan Asean funds hold shares in hospital-operator Bangkok Dusit Medical Services Pcl, according to data compiled by Bloomberg. The stock has gained more than 30% since May 2017, but was down about 2.8% this year through Thursday’s close.

The JPM Asean Equity Fund, which Ng co-manages, has beaten 87% of peers over the past five years, according to data compiled by Bloomberg.

Growth is mostly slowing in Asean countries in line with the global economy, “so you can’t expect things would be fantastic,” Ng said. Wall Street has “essentially ignored Southeast Asia,” she said. Foreign investors have pulled more than $25 billion from five major Southeast Asian stock markets since 2013, according to data compiled by Bloomberg. But Ng still sees investment opportunities.

“Tourism is a bright spot,” she said.

( Updates to add JPMorgan’s comments on baht in sixth paragraph )