Time to buy Asian equities - JP Morgan AM

Added 13th July 2016

Asian bonds might offer better returns in the short run, but it is equities investors should look at in the long term, said JP Morgan Asset Management Asia chief market strategist Tai Hui.

Time to buy Asian equities -  JP Morgan AM

Asian equities have been cheap with appealing dividend yields, but now they are fueled by more catalysts, Hui argued in a briefing on Monday.

“Dollar peaking out, oil and China stabilizing, all of these are great catalysts for bargain hunters to come into Asia,” he said. However, once these factors are priced in or exhausted, they need earnings growth and that is not happening at the moment, he cautioned. 

“If I am looking for 6-12 months, Asian fixed income should provide a better risk reward balance, which by default have lower volatilities," Hui continued. “In the longer run for 2-3 years, and I am actually positioning for that, Asian equities look more attractively valued, and it provides the income.” But investors need to accept the high volatility, he noted.

After the Brexit, it has been non-Asia clients tending to jump into Asian fixed income instead of equities, he added.

Hui also thinks investors can start to revisit their currency compositions to increase more local currency bonds in the region.

Some local currencies, especially South East Asian ones such as Malaysia ringgit, are “extremely cheap”.

Comparing to the currency’s 10-year average in real effective exchange rate terms, or the trade-weighted basis, the ringgit is now 2.4% lower than the long-term average. Those of Taiwan and Indonesia are also 0.7% cheaper from the average level.

Overall, his view of being relatively defensive has not been changed from three months ago. 

Kames Income Hub

home_research_centre

Vincent McEntegart, manager of the Kames Diversified Monthly Income Fund, explains how he aims to deliver a stable and sustainable income of 5% p.a.*, paid monthly, by investing in a range of asset classes

Square Mile Research

Jupiter UK Special Situations
Jupiter UK Special Situations...

Talking Factsheets is a video service for users...

Visitor's Comments Add your comment

Add Your Comment

We won't publish your address

Profiles

Viewpoint

Investment Strategy

Feature

Tweets

Events

PA Emerging Markets 2017
PA Emerging Markets 2017

Tuesday 7 February
Bloomsbury Street Hotel, London

PA SRI 2017
PA SRI 2017

21 February 2017
Bloomsbury Street Hotel, London

PA Japan 2017
PA Japan 2017

Wednesday 8th March
Furniture Makers' Hall, London

PA Dublin 2017
PA Dublin 2017

Tuesday 14th March
Westbury Hotel, Dublin

Sponsored Content

Investment Strategy

OTHER STORIES FROM LAST WORD...