Ask The Experts: Two Countries In Asia Will Do Better
In this episode, Alistair Thompson, Director, Asia Pacific Equities at First State Investments shares his views on Asian markets.
1) What is your general outlook for Asia in the second half of 2012?
- Cautious about the Asian markets due to the return of risk aversion on slowing growth in China and deteriorating European news
- Structural problems in the west are yet to be resolved
2) Global markets have recorded huge drawdowns in the recent month, do you think there presents buying opportunities? As for valuations, is Asia looking cheap right now?
- In a broader sense, Asia is trading at a discount compared to its historical levels (reasonable value but not compelling cheap); PB stands at around 1.7X (2X in average)
3) In the Asian region, which countries will you overweight?
- Biggest exposure by country is Hong Kong, but not bullish on Hong KongÃ¢ÂÂs property market or China
- A reasonable amount of money is invested in Singapore, given that the SGD will appreciate and government will control inflation through currency strength, the banking sector in Singapore looks reasonable valued
4) Which sectors will have the most growth potential?
- Consumer staples in Asia are compelling, most companies have strong cash flow, not much leverage and more immune to what is happening in the West
- The portfolio is in general defensively positioned
5) Investors are still fearful of the volatility in the markets, what risks are they facing in the Asian equity markets? How would you advise them to allocate their portfolios?
- Major risk is an addiction to debt in the developed world
- Suggested allocation: some money in gold, some in commercial property, and some in well-managed companies with strong cash flow and no debt
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