Strong fundamentals driving opportunities in Asia
Rising consumption, positive political and market reforms, and the strength of the technology sector are three fundamental developments pointing to superior investment opportunities in Asia, according to Baring Asset Management, the international investment management firm. Firms ideally positioned to capitalise include Taiwanese smartphone component manufacturer Largan Precision, Airports of Thailand, and upmarket Korean cosmetic manufacturer AmorePacific.
Barings believes that the improved growth outlook across Asia compared to emerging market peers does not come at a premium: in relative terms, emerging Asia markets are trading at close to one standard deviation below historical norms compared to the rest of the emerging universe – this is lower than it has been for years and, Barings believes, indicates an attractive opportunity for investors.
HyungJin Lee, Manager of the Baring Eastern Trust and head of Asian Equities, said at a recent round table: “Rising Asian consumption, driven by supportive demographics across the region, is a key theme underpinning many of the companies we favour in the Baring Eastern Trust. For example, as Asian consumers spend more on travel and leisure as well as cosmetics and healthcare, we find companies with attractive valuations and good execution potential, benefiting from these growing markets.
“The potential of technology has been a long-term theme across markets in Asia, but this time the companies are global brands and the opportunities are larger. Recent falls in commodity prices have allowed Asian manufacturers in some industries to benefit from improved profit margins. Add to this the effect of structural change in the region, and we think the outlook for earnings growth for companies is favourable, particularly when compared with emerging market peers.”