The Asian stock market has returned to the valuation levels of the late eighties says Barings A...
The Asian stock market has returned to the valuation levels of the late eighties says Barings Asset Management (BAM), a point at which it began to embark on rapid growth. With this in mind, Barings reckons now is the time for investors to place a greater focus on the region.
The Asian economic climate is beset by negative newsflow - the Tokyo stock market, for instance, has slumped to levels not seen for 17 years and unemployment has topped 5% for the first time since records began. BAM suggests the current state of play of the Asian markets presents investment opportunities akin to those that occurred during the market sell offs relating to Tianamen Square (1989), The Gulf War (1991) and the collapse of LCTM (1998).
Head of Asian equities at BAM, Khiem Do, said: "The original reasons provided for investing in Asia back in the early nineties such as the superior economic growth rate, the attractive demographic profile, the highly educated labour pool, the underdeveloped markets relative to their economic purchasing power and the high savings rates, remain intact."
Khiem Do concluded: "The four drivers of economic growth, liquidity, management (restructuring) and valuation appear to be supportive of the region and that now is probably an extremely opportune time to invest in Asia."
In terms of growth, BAM is projecting GDP growth, for the whole region, to rise by 4.6% this year and 5.7% next year. Corporate earnings are expected to contract by about 4% this year and to recover by rising 16% next year.
BAM's Asian strategy is to gain exposure to economies and companies that are likely to show a strong recovery next year, namely Korea, Taiwan, Singapore and Hong Kong.
At a sectoral level, the Baring Asia Growth Fund is overweight in companies that are exhibiting growth at a reasonable price in the consumer, technology and mobile phone sectors.
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