Eastspring Investments sees Asian equities attracting European investors
Eastspring Investments, the Asia asset management arm of Prudential plc, has announced that assets under management on its Luxembourg Sicav platform rose 4% in Q1 2014 to reach $19.3bn, as attractive Asia stock and bond valuations appealed to UK and European investors looking for diversified sources of return.
Eastspring opened its European office in 2013 and now offers investors 42 equity and fixed income funds through its Sicav platform.
These include country-specific exposures to markets such as Japan, China and India, access to broad Asian corporate and sovereign bonds and specific strategies such as Asian equity income and Japanese dynamic stocks.
Kevin Gibson, Singapore-based Chief Investment Officer, Equities, said he believed investors had overlooked the growing value opportunity in Asia.
“The market is discounting a poor earnings outlook which does not seem justified. Valuations are at historic lows as the region has been neglected. Investors in Asia are well-placed to benefit from the fundamental strength of Asian companies while a generous margin of safety exists between cheap stocks and attractive valuations versus expensive stocks with demanding valuations.”
Gibson also highlighted the investment opportunity in Japan and said that although Abenomics has spurred new international interest in Japanese equities, corporate Japan had already started to benefit from meaningful restructuring and debt deleveraging efforts.
“There are ample underappreciated companies in Japan right now, particularly but not exclusively in technology, materials and financials. Corporate profitability is improving greatly and this is yet to be fully priced in by the broader market. Ultimately these mispriced opportunities are a source of potential outperformers, and our analysis suggests there are more attractive valuation outliers relative to long term history in Japan now than in 2012.”
Margaret Weir, manager of the Eastspring Investments – Asian Equity Income fund, said that Asia’s burgeoning dividend culture should hold appeal for global as well as local investors searching for income.
“A dividend culture has truly taken root in Asia. In the 1990s less than 50% of the region’s stocks paid dividends, but that number now stands at 90%. Even in markets like South Korea where companies have historically hoarded cash, things are changing. Samsung Electronics recently tabled a resolution about developing a new dividend policy. These are very encouraging steps for equity investors and provide a strong rationale for considering Asia within their income strategies.
“Combined with relative growth potential and balance sheet strength, Asia now offers amongst the highest dividend yield of anywhere in the world,” Ms Weir said.
Speaking at Fund Forum International, Eastspring Investments Chief Executive Guy Strapp said: “As the global economy improves, European investors are looking afresh at Asia, and it’s an exciting time for us to be bringing our long-held on-the-ground knowledge of these markets to a new audience. Asia is the world’s fastest growing region and contains a wealth of diversification opportunities. Starting valuations are critical when investing in equities and current valuations offer a good entry point.”
Eastspring Investments has some $105bn in assets under management globally as at March 31 2014.
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