17 Feb 2010
Fund managers in the Asia equity sectors believe that companies that can deliver sustainable and predictable earnings streams will demand a healthy premium over those that cannot, according to Standard & Poor’s Fund Services in its latest annual review of the sectors.
Samantha Ho at Invesco fully subscribes to this view and expects the Chinese market to broaden out at the sector level, but believes that this expansion will be dominated by the market leaders. Agnes Deng at Barings also believes that earnings will drive the market in 2010 led by domestic consumption driven by the growth of the rising middle-class.
Despite being positive, Louisa Lo of Schroders has a slightly more balanced view and during early Q4 2009 took steps to rein in some of her most active positions, in a bout of profit taking. London-based, Charlie Awdry, manager of the S&P Fund Services A rated, Gartmore China Opportunities fund, also held a mixed view.
Elsewhere in the region, the message was upbeat. Sung Woo Kim, manager of the Mirae Korea Equity fund, was positive on the prospects for Korea, citing a number of companies who are among the world leaders in their respective sectors.
Bratin Sanyal, head of Asian equities at ING, sees the smaller, export-oriented economies within the Asean sub-set of countries, continuing to catch up with the other markets within the region. He was particularly optimistic on the prospects for Thailand, as was the team at Templeton, as evidenced by their 24% allocation (compared to 2% for the MSCI Asia ex Japan benchmark) within the AAA rated Templeton Asian Growth fund.
The Invesco team remains positive on the outlook for India and takes the view that infrastructure, consumption and outsourcing will be the key drivers of the economy going forward. They also welcomed the new government's proposed divestment program of state owned services and their approach to contain the fiscal deficit.
Given the underlying investment style, we were not surprised to learn that Angus Tulloch, one of the most experienced investors in our review, had turned cautious on the markets given the sharp rise over such a short period. His primary concern is caused by the flow of "hot money" into the region and the knock-on effect of inflation. In an attempt to negate his inflationary fears he has increased the allocation to gold-related stocks.
"The general view is that macroeconomic factors will play a less prominent role in 2010 than the previous year, and markets will be far more fundamentals driven," said John Monaghan, lead analyst on the South East Asia, Pacific and emerging Asia sectors at S&P Fund Services.
Samantha Ho at Invesco fully subscribes to this view and expects the Chinese market to broaden out at the sector level, but believes that this expansion will be dominated by the market leaders. Agnes Deng at Barings also believes that earnings will drive the market in 2010 led by domestic consumption driven by the growth of the rising middle-class.
Despite being positive, Louisa Lo of Schroders has a slightly more balanced view and during early Q4 2009 took steps to rein in some of her most active positions, in a bout of profit taking. London-based, Charlie Awdry, manager of the S&P Fund Services A rated, Gartmore China Opportunities fund, also held a mixed view.
Elsewhere in the region, the message was upbeat. Sung Woo Kim, manager of the Mirae Korea Equity fund, was positive on the prospects for Korea, citing a number of companies who are among the world leaders in their respective sectors.
“During the review period, Korea was reclassified from emerging to developed market status by index provider FTSE,” Monaghan added. “This buoyed the market's returns over the period and fund managers foresee another boost if other index providers follow suit.”
Bratin Sanyal, head of Asian equities at ING, sees the smaller, export-oriented economies within the Asean sub-set of countries, continuing to catch up with the other markets within the region. He was particularly optimistic on the prospects for Thailand, as was the team at Templeton, as evidenced by their 24% allocation (compared to 2% for the MSCI Asia ex Japan benchmark) within the AAA rated Templeton Asian Growth fund.
The Invesco team remains positive on the outlook for India and takes the view that infrastructure, consumption and outsourcing will be the key drivers of the economy going forward. They also welcomed the new government's proposed divestment program of state owned services and their approach to contain the fiscal deficit.
Given the underlying investment style, we were not surprised to learn that Angus Tulloch, one of the most experienced investors in our review, had turned cautious on the markets given the sharp rise over such a short period. His primary concern is caused by the flow of "hot money" into the region and the knock-on effect of inflation. In an attempt to negate his inflationary fears he has increased the allocation to gold-related stocks.
