At the Hubbis Independent Wealth Management Forum – Hong Kong 2026, James Cook, Executive Director, Head of Investment Directors & Specialists at Federated Hermes, set out a differentiated case for Asia ex-Japan equities at a point when investor attention remains heavily concentrated around AI hardware, India’s structural growth narrative, and the mega-cap quality-growth segment of the market.
Cook’s presentation argued that the current opportunity lies not in chasing the most widely owned parts of the region, but in applying valuation discipline, bottom-up stock selection and a contrarian mindset across markets where sentiment has become either excessively optimistic or excessively depressed.
The message was not that Asia ex-Japan equities are simple, nor that volatility can be avoided. It was that volatility, valuation dispersion and sentiment-driven flows can create material opportunities for active investors prepared to move away from consensus positioning and own high-quality businesses when the market has mispriced them.
Key Takeaways
- A Contrarian, Bottom-Up Discipline Remains Central: The Federated Hermes Asia ex-Japan strategy is built around buying companies when valuations are compelling, rather than following benchmark weightings or consensus flows.
- India And Taiwan Look Expensive: Cook argued that India and much of Taiwan technology remain unattractive on valuation grounds, despite India’s underperformance over the past 18 months and Taiwan’s strong AI-linked momentum.
- AI Exposure Requires Selectivity: Federated Hermes is not ignoring AI, but Cook said the team prefers discounted semiconductor exposure such as Samsung, Hynix and TSMC, rather than broader Taiwan technology names trading at peak multiples.
- Thailand And ASEAN Have Been Overlooked: Thailand has faced political uncertainty, weak consumption, soft tourism and regional tensions, but Cook argued that this has created opportunities to buy liquid, high-quality companies at exceptional prices.
- Korea Remains A Core Overweight: Korea has benefited from semiconductor earnings and corporate governance reform, including a new Commercial Act requiring companies to treat all shareholders equally.
- The Portfolio Is Highly Differentiated: The strategy sits apart from many large Asia ex-Japan peers, which Cook described as clustered around mega-cap quality and growth. Federated Hermes’ portfolio is cheaper relative to the benchmark and peers, while accepting somewhat lower aggregate quality.
- Downside Capture Matters: Cook emphasised that the strategy’s history of stronger relative outcomes in negative market years has helped investors avoid being shaken out at the worst possible point in the cycle.
Cook framed the Federated Hermes Asia ex-Japan strategy as fundamentally contrarian, but not simplistic deep value.
The distinction matters. The strategy is not designed to buy poor companies purely because they are cheap, nor to own quality at any price. Instead, the process sits between those extremes: looking for attractive businesses when valuations offer sufficient compensation for the risks being taken.
The investment philosophy presented by Federated Hermes is based on the interaction between price and quality. The strategy seeks opportunities where the market has become too pessimistic, too euphoric elsewhere, or too willing to extrapolate recent trends. Its typical holdings range is 45 to 60 names, with an average holding period of 18 to 24 months, and the approach is explicitly bottom-up and benchmark-agnostic.
“We are not paid to own what everyone else already loves,” Cook said. “We are paid to identify when the market has moved too far in either direction.”
That discipline has led to a portfolio that looks materially different from the benchmark. As of the end of March 2026, the strategy was overweight China, Thailand and Korea, while being significantly underweight India and Taiwan. Its sector positioning, Cook explained, is not a top-down macro call, but the derivative of individual stock selection and valuation work.
Looking Past The Crowded AI Hardware Trade
Cook acknowledged that many market participants have returned quickly to the AI hardware trade, particularly in Korea and Taiwan, even while looking through geopolitical uncertainty, Middle East conflict and the potential implications of energy supply shocks.
Federated Hermes is not rejecting the AI theme outright. Instead, Cook said the team is being highly selective in how it accesses that theme.
In Korea, Samsung and Hynix were highlighted as examples of semiconductor exposure still available at comparatively discounted valuations. Cook described Samsung as trading on an exceptionally low earnings multiple and at a modest price-to-book valuation, particularly when compared with international peers. Hynix was also positioned as more attractively valued than some US-listed peers exposed to the same memory cycle.
In Taiwan, Cook was clear that TSMC remains the standout company. Its leadership in leading-edge semiconductor capacity, scale advantage and strategic importance give it a defensible position that the team continues to respect.
“TSMC is the best company we can own in Taiwan,” Cook said. “The problem is not TSMC. The problem is everything around it that has been pulled up by the same AI narrative without the same defensibility.”
That is where Federated Hermes draws the line. Cook argued that many non-TSMC Taiwanese technology companies have benefited from broad AI demand expectations and speculative flows, with valuations already reflecting peak multiples and peak profitability. From the team’s perspective, that creates an asymmetric risk profile skewed to the downside.
India’s Growth Story Has Not Become Cheap Enough
India was another area where Cook took a firmly contrarian position.
He acknowledged that India has already underperformed for around 18 months, with macro and domestic challenges weighing on sentiment. However, in his view, the correction has not gone far enough to create a sufficiently attractive entry point.
The core issue is valuation. Cook argued that India continues to trade close to US market valuation levels, despite offering a different profile in terms of innovation depth, technology leadership and governance standards. The presentation materials showed India and Taiwan equity valuations close to the US on forward price-to-earnings metrics, while also remaining expensive on price-to-book metrics.
Cook’s point was not that India lacks structural growth potential. It was that strong structural narratives can still be poor investments when the entry price is too high.
“India may be a great long-term story,” he said. “But great stories do not protect investors from paying the wrong price.”
For Federated Hermes to find India more attractive on a relative basis, Cook said valuations would need to move towards a more normalised mid-teens multiple. Until then, the team sees more compelling opportunities in markets such as China, Korea and Thailand.
Thailand As An Overlooked Contrarian Opportunity
Cook placed particular emphasis on Thailand and the broader ASEAN region, arguing that these markets have been overlooked as investors focused on AI-linked memory and logic names in Korea and Taiwan.
Thailand, in particular, has faced a difficult combination of headwinds. These include trade uncertainty, political instability, tensions with Cambodia, weak domestic consumption, subdued tourism and the impact of a strong Thai baht. As Cook noted, Thailand is no longer viewed as the cheap tourist destination it once was, and this has weighed on the domestic market.
Yet that combination of negative sentiment and weak performance is precisely what has made the market interesting from a contrarian perspective.
Cook argued that the Thai market now looks oversold, creating opportunities to buy liquid, high-quality companies at exceptional prices. The Federated Hermes portfolio’s top holdings include Bangkok Bank and CP All, both of which reflect the strategy’s willingness to own businesses where valuations, domestic pessimism and company quality align.
“When a market becomes this unloved, the question is not whether the headlines are bad,” Cook said. “The question is whether the price already reflects them.”
Thailand’s appeal, in Cook’s framing, lies not in a near-term macro forecast, but in the availability of individual companies where expectations have fallen far enough to create attractive forward returns.
Korea And The Corporate Reform Catalyst
Korea remains an important relative overweight for the strategy, although Cook noted that Federated Hermes has been trimming into strength.
The team had built a substantial overweight to Korea when the market was deeply out of favour. That positioning has since been supported by two forces: semiconductor earnings and corporate governance reform.
Cook placed particular emphasis on the latter. He described Korea’s new Commercial Act as a milestone moment, noting that the government had campaigned on an ambition to lift the Kospi towards 5000 and had introduced reforms requiring Korean companies to treat all shareholders equally.
Federated Hermes has been active in campaigning for corporate governance reform in Korea, and Cook positioned the recent changes as a meaningful step in improving shareholder outcomes.
“Korea is not only a semiconductor story,” he said. “It is also a shareholder reform story, and that matters for how capital is treated over time.”
The portfolio’s Korea exposure includes Samsung Electronics, Samsung Fire & Marine Insurance and Samsung Life Insurance, reflecting both semiconductor cyclicality and the potential value unlocked through governance, accounting and capital management changes.
China, Korea And Thailand Versus The Expensive Consensus
Cook’s country positioning was presented as a clear expression of valuation discipline.
As of March 2026, the representative portfolio was overweight China and Hong Kong, Thailand and South Korea, while underweight Taiwan and India. The country active weights shown in the presentation included a significant overweight to China and Hong Kong, a meaningful overweight to Thailand and Korea, and substantial underweights to India and Taiwan.
This positioning stands in contrast to the flows that have dominated Asia ex-Japan equities in recent years. Investors have gravitated towards India for structural growth, Taiwan for AI hardware, and large-cap quality-growth names more broadly.
Cook argued that this has created crowding. Many of the largest competing funds in the Asia ex-Japan category sit in the same mega-cap quality-growth bucket, while Federated Hermes sits in a more value-oriented large-cap segment.
That does not mean the team has permanently avoided growth. Cook stressed that the strategy has survived and outperformed over time because it has never been a deep-value vehicle unable to buy quality businesses. The team has been willing to buy what he called “Ferraris” when they were available at the right price.
“We have bought the Ferraris,” he said. “We have just refused to buy them when the market priced them as if nothing could ever go wrong.”
The current portfolio, however, contains more of what Cook described as “Fords” than “Ferraris” – companies that may not carry the highest market glamour, but where valuation support and prospective returns look more compelling.
A Cheaper Portfolio In A Crowded Peer Landscape
Cook highlighted the strategy’s valuation profile relative to both the benchmark and its peer group.
The presentation showed the Federated Hermes Asia ex-Japan Equity Fund as materially cheaper than the MSCI AC Asia ex-Japan benchmark and cheaper than many of the largest peer funds by assets under management. The fund was shown with a lower price-to-earnings ratio and lower price-to-book ratio than the benchmark, while also sitting apart from peers clustered in higher-growth style categories.
Cook acknowledged that this comes with some trade-off. The portfolio is slightly lower on certain quality metrics than the benchmark and several peers. But in his view, that is the price paid for owning businesses where the valuation starting point is more attractive.
The fund’s differentiated profile is not incidental. It is the output of a process that deliberately avoids buying the market’s most crowded exposures when valuations no longer compensate for risk.
“If everyone owns the same high-quality growth names, the differentiation is gone,” Cook said. “The opportunity is in being willing to own something different before the market agrees with you.”
The Importance Of Not Trying To Time Asia
Cook closed by returning to the reality that Asia ex-Japan equities remain volatile.
The asset class is characterised by sharp swings in sentiment, large dispersion between markets and sectors, and frequent rotations between value, growth, quality, momentum and cyclicality. Cook argued that this is precisely why investors should be cautious about trying to time their exposure.
He pointed to the correction in March and the subsequent rally as evidence that the market can move quickly, often before investors have a chance to reposition. For Cook, the more durable approach is to own a strategy that can navigate volatility through stock selection, valuation discipline and downside resilience.
Federated Hermes’ materials show that since inception, the strategy has outperformed in 59% of all months, 54% of months when the benchmark rose, and 68% of months when the benchmark fell. The strategy also records stronger downside market capture than upside market capture, suggesting a profile designed to participate in gains while offering relative resilience during weaker markets.
Cook emphasised that the strategy has had five negative-return years in its history, but in each of those years it delivered a better outcome than the benchmark. In his view, that matters because it reduces the risk that investors are forced or frightened out of the asset class at the wrong time.
“The worst time to abandon Asia is often when it feels most uncomfortable,” he said. “Our job is to help investors stay invested by delivering a better outcome when markets are difficult.”
Being Greedy When Others Are Fearful
The presentation ended with a return to the core contrarian principle: buying companies when they are cheap, selling them when they become more expensive, and maintaining discipline when sentiment is moving rapidly in either direction.
For Cook, this is not a slogan. It is a practical framework for an asset class where investor attention often swings between excessive optimism and excessive pessimism. Today, he suggested, that means resisting the temptation to chase expensive India exposure, being careful around crowded Taiwan technology trades, selectively owning discounted AI beneficiaries, and looking more closely at overlooked markets such as Thailand and reform-driven Korea.
The broader message was that Asia ex-Japan equities remain fertile ground for active management precisely because the region is uneven, volatile and often mispriced.
Cook’s conclusion was direct: investors should not try to own Asia through consensus alone. They should ask which Asia they are buying, what they are paying for it, and whether the portfolio they hold is meaningfully different from everyone else’s.
“In essence, what we try to do is simple,” he said. “Buy companies when they are cheap, sell them when they become more expensive, be greedy when others are fearful, and fearful when others are greedy.”
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