Aberdeen Asset Management's Hugh Young has cautioned there is a lack of buying opportunities in Asia as earnings growth continues to slow down across the continent.
Young (pictured) said small-cap Asian equities in particular have become considerably more expensive over the past year, as investors move down the market cap spectrum.
That follows a rotation out of large-cap defensives that had themselves become "expensive" in the eyes of many managers.
Young, managing director of Aberdeen's £40bn Asia business, said small caps have now moved to trade at a small premium compared to their large-cap peers, making the area a less attractive entry point.
"There is no longer stunning value in small caps in Asia, the space is no longer the fertile hunting ground it used to be," he said.
Young added he is struggling to introduce new ideas into his fund ranges as earnings growth continues to disappoint.
"Earnings growth over the past three years has proven sluggish and I expect it to contract further in 2014, with earnings per share growth currently around the 7-8% mark.
"I find the underlying quality of the company's further down the market cap exciting but in terms of price there is very little value, there is certainly not much hidden value left that has not already been discovered."
Over the past year Young has ran a very low turnover across his Asian fund mandates, but has used the sharp share price falls in the resources sector as an opportunity to top-up holdings in Rio Tinto and BHP Billiton.
"I have been topping up my two big miners, to be honest I could be catching the proverbial falling knife as they could fall a lot further from here but I am confident the stocks will deliver over the long-term under the new management both companies have put in place," added Young.
Elsewhere, Young said he continues to be bearish on China, arguing the country's strong domestic growth story does not translate into stock market success for investors.
"China remains the most difficult market for stock pickers. Over the past year the team has had hundreds of meetings with Chinese companies but we still only hold a handful of stocks across the funds as business in mainland China do not look after the interests of shareholders."
Aberdeen's Asian fund range has experienced strong levels of inflows in recent years, which earlier this week prompted the firm's chief executive Martin Gilbert to play down suggestions some products could be soft-closed in the coming months.
Young added due to the teams buy and hold investment philosophy he has no capacity concerns on any of the Asia Pacific products.
"Of course we have got to be careful about capacity but because of our long-term investment style - for instance we have held Rio Tinto for over twenty years - I am still running money in the same style I was running it when I first started my career."
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