Asian markets tipped to grow in second half of year

An office worker at Raffles Place.
An office worker at Raffles Place. ST PHOTO: LIM YAOHUI

Asian markets could stabilise and grow in the second half of the year, according to global asset manager PineBridge Investments.

Mr Wilfred Son, its portfolio manager for Asia ex-Japan equities, said in a recent report that he remains "bullish" on Asia from a medium- to long-term perspective.

"(This is) due to the region's inherent strengths emanating from its huge consumer base, the investments required to service this base and the regional drive to innovate."

Mr Son believes that domestic demand in Asia-Pacific should continue to improve and help lift consumption and investments, especially in China and South-east Asia.

"This will also further insulate growing Asia economies from global volatility."

Mr Son said that certain industries such as renewable energy, the Internet of Things and high-quality Asian manufacturing will offer opportunities as long-term trends come into play.

Renewable energies like solar, wind and hydro power, for instance, are gaining prominence in line with "the anticipated growth in domestic demand and the rise of the Asian middle class".

In the shorter term, however, Ms Elizabeth Soon, the firm's managing director and portfolio manager for Asia ex-Japan equities, expects volatility to continue hitting markets in this half of the year given the challenges of global economic growth and currency.

Ms Soon, a Singaporean based in Hong Kong, told The Straits Times that China in particular will remain high on the radar for investors.

She noted that growth in the world's second-largest economy, which has been caught in a protracted downturn for the past five years, has slowed from double-digit to mid-single-digit expansion.

But it is "still respectable compared to growth we see across the rest of the world".

"The sharp drop in the equity markets at the start of this year has driven valuations to close to 10-year lows," she said.

"But if we look over the longer term, the opening up of the A-share market (in China) will increase the breadth of stocks. With a broad domestic consumer base, the economy will continue to be of global importance and hence cannot be ignored," she added.

"If one takes a long-term view of the markets, as we do, this is an opportune time to accumulate."

Ms Soon's advice for investors? "Look for the right entry points, know your companies, and do not either sell with the herd or buy with the herd.

"This is the time to seek out good companies at cheaper valuations and to be patient; this is about long-term returns, not short-term trades."

A version of this article appeared in the print edition of The Straits Times on February 08, 2016, with the headline 'Asian markets tipped to grow in second half of year'. Print Edition | Subscribe