Cautious outlook for Asian equities
Jan de Bruijn, Asia equity fund manager at Threadneedle UK, is taking a more cautious approach to Asia, despite the market rising in the past few months.
The market has seen a return of risk appetite from Asian investors, resulting in the MSCI Asia Pacific ex-Japan Index rising by 14.4 per cent in May, the third consecutive double-digit rise. However, Bruijn, who is visiting Asia this week, has some more cautious opinions on the outlook for the region.
He says, ‘After such a strong rally it is to be expected that Asian markets will tread water and take a breather for a while. Markets have gone from being cheap at the start of the year to being close to fair value, but we have an element of comfort knowing that they are not too expensive yet.
‘Whilst risk appetite remains higher than at the start of the year, market risks have also increased, with visibility for the second half continuing to be poor. Loose monetary policy and aggressive fiscal policy have ensured Asian economic growth will now be stronger than initially expected at the start of the year, but it is a global recovery in economic demand which is needed to sustain the quality of this growth. Without a global recovery, this growth in Asia is questionable, although China and India do represent exceptions.
‘Nevertheless, we remain confident that the sheer liquidity in the region, coupled with the loose monetary policy, limits the downside.
‘We are unlikely to retest the lows seen in the last year as Asia's comparatively superior macro outlook suggests that Asian markets are likely to continue to outperform other equity markets. However, the lack of certainty means we continue to hold a mixture of quality “leaders” within this space, preferring the domestic plays in contrast to export-related stocks.
‘Catalysts that would make us more aggressive would be clearer signs of an improving global macro environment, and/or indications of better earnings growth for the second half.’
There are currently no comments on this post.
Related Content
Leave a comment
Comment
More
investors' blog
US Sector View: Consumer Conundrum
2 September 2010 [0 comments]Kully Samra, UK branch director of US broker Charles Schwab, reviews the sector trends in the US for the short-term investor.
The Scylla of inflation and the Charybdis of deflationary collapse
24 August 2010 [0 comments]Andrew Bell, chief executive of Witan Investment Trust, gives his views on the 'Battle of Banking'
US Sector Views: Dangers of Dogmatism
23 August 2010 [0 comments]Kully Samra, UK branch director of US broker Charles Schwab, reviews the sector trends in the US for the short-term investor.
Recommendations
Q&A forum
Investing in emerging markets 14 April 2010 [0 comments]
I want to know more on the different strategies an investor could use to invest in the emerging markets.
Mr. Vanderbilt, via email.
- A green issue 14 April 2010
- Sector confusion
27 September 2008 - Stopping the losses 13 September 2008
- Repayment dilemma 6 September 2008
- Suspended animation 22 August 2008
Events
Top Ten Life Funds
| Fund | Offer | 1y | 3y | 5y |
|---|---|---|---|---|
| UBS Life Structured Credit A | 94.15 | 174.5 | n/a | n/a |
| Skandia Finland FIM Russia | 11.29 | 60.6 | -2.7 | 48.5 |
| Skandia Finland Alfred Berg Ryssland | 0.86 | 49.5 | -18.0 | n/a |
| Skandia Finland BlackRock Gold & General | 2.57 | 45.6 | 41.3 | 150.3 |
| Zurich American Property AL G4 | 43.30 | 44.7 | 20.9 | 39.3 |
| Skandia Norway Alfred Berg Ryssland | 0.87 | 41.2 | -16.8 | n/a |
| Aviva Investec Global Gold S4 | 0.00 | 41.0 | n/a | n/a |
| Skandia Finland JPM New European | 2.07 | 40.7 | -13.2 | 44.6 |
| Skandia Finland First State Greater China Growth | 1.35 | 40.0 | n/a | n/a |
| Skandia Finland Neptune Russia & Greater Russia | 1.49 | 39.8 | n/a | n/a |




Change: