Aberdeen sees plenty of downsides for Asian equities

There are still plenty of downsides for Asian equities despite attractive valuations, said Hugh Young, group head of equities at Aberdeen Asset Management.

“There are plenty of downsides in equities and the recent selloff is a healthy reminder to people what equity market is about – it is not always going on a straight line,” said Young, who has over 25-year experiences in managing the group’s Asian assets since 1985.

While talking about China, Young said he hadn’t found a lot of mainland companies which can meet his standard and the team is not holding any Chinese banks. “As fundamental investors, it has been very hard for us to invest in Chinese banks because we are not comfortable with the mainland policies.”

On the contrary, Young is more confident on banks in Hong Kong and Singapore as they are showing stronger balance sheets and fundamentals. Young also added recent market reactions have been overdone and valuations have turned attractive. However, he is still cautious about cheap valuations as he expects flat earnings for the coming two years.

Anthony Michael, regional head of fixed income, also believes Asia will not be immune from the sluggish global backdrop and the problems in the eurozone will take years to be resolved.

“Greece will not default in short term because the eurozone is not ready to deal with this. They may continue to buy time until Q1 2012. Asian asset markets are not a safe haven during periods of extreme global volatility and downside risk remains for Asian currencies and credit markets in coming months,” he said.

 

This article was first published on Professional Adviser Hong Kong

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