by winston » Thu Jan 22, 2009 2:13 pm
FACTBOX-Asia fund managers finding bargains in stocks, bonds
HONG KONG, Jan 22 (Reuters) - Asian economies will likely remain under severe pressure this year because of deep recessions in the developed world, but some asset managers have discovered bargains in regional corporate credit and equity markets.
The rush out of risky assets that accelerated a violent move out of equities and emerging market currencies into government bonds last year has caused some high quality stocks and bonds to be dragged down as well.
Many global fund managers with longer time horizons say they believe 2009 presents an opportunity to sift through last year's wreckage and take advantage of these bargains even though the near-term economic outlook for Asia is grim. Below is a list gathered in the last few weeks of asset management firms and their strategies for the year.
ABERDEEN ASSET MANAGEMENT ASIA:
* View: Emerging economies will gradually decouple from developed ones as year progresses. Asia will recover relatively quickly because of the region's high saving rates, relatively low corporate debt and government fiscal flexibility.
* Market strategy:Rapid deleveraging in 2008 has uncovered attractive opportunities in corporate credit and equities. Focus on balance sheet strength and market leaders.
* Asset allocation: Overweight equities overall, with underweight U.S. stocks, overweight Asia and neutral on Europe. Extra allocation for corporate bonds. Currently short Asian currencies against U.S. dollar but will look to go long Asia in second half of 2009.
* Assets under management: $26.5 billion as of November 2008.
BARING ASSET MANAGEMENT:
* View: Worst-case scenario for the global economy has been almost fully discounted by markets. Asian economies and consumers are under-leveraged, and regional market valuations are attractive.
* Market strategy: Growth assets look cheap and "under-owned" in comparison to safe-haven assets investors relied on last year.
* Asset allocation: Best growth assets include developed economy corporate bonds, Chinese equities, some commodities. Barings has been adding Hong Kong, Chinese, some U.S. equities and mid-maturity U.S. corporate bonds to its multi-asset portfolios since October 2008.
* Assets under management: $5.8 billion in Asia Pacific as of November 2008.
HSBC GLOBAL ASSET MANAGEMENT:
* View: Global recession will be deep and last for most of 2009. Fiscal stimulus and monetary action will be the only supports against severe downturn. Asia is well-positioned with sound banking structures, low leverage and fiscal surpluses. Latin America will feel drag of lower commodity prices, Eastern Europe is vulnerable due to large current account deficits.
* Market strategy: Financial balance sheets and corporate earnings likely to continue to suffer this year, but significant opportunities lie in equities and corporate bonds.
* Asset allocation: Equities likely to bottom in first half of 2009. Valuations are attractive, especially in Europe and Asia. Government bonds have a significant risk in the long term because of massive new issuance. U.S. corporate credit is a bargain at current spread levels. U.S. dollar likely to weaken in 2009 essentially because of extensive money printing.
* Assets under management: $45 billion in Asia Pacific as of September 2008.
ING INVESTMENT MANAGEMENT, ASIA PACIFIC:
* View: Asia, ex Japan, will continue to suffer as a knock-on effect of the U.S. recession. Unemployment may continue to rise and prices of real estate will probably fall further. China, though, will weather the global downturn best, utilising fiscal spending, lower taxes, easier monetary policy.
* Market strategy: Not optimistic on Asian equity markets in general and expect investors to rotate funds from one country to another and from sector to another. Rates China's equities market neutral but plans to come in once investors have sold off and valuations have come down.
* Asset allocation: Overweight on India's equity market, favouring telecommunications, construction and infrastructure sectors. Underweight on export-dependent countries such as South Korea, Taiwan and Indonesia. Avoiding resource sectors such as oil because demand will continue to fall.
* Assets under management: $125 billion.
INVESCO:
* View: Developed economies will shrink in 2009, most significantly in the United States. Recovery is most likely in 2010. Expects forthcoming fiscal stimulus from the Obama administration to be a disappointment because it doesn't focus squarely on indebtedness.
* Market strategy: Lower inflation around the world is advantageous for corporate bonds and supporting an extended upturn for equities. Asia's lack of debt compared with the United States or Britain will enable the region to recover more quickly than other parts of the world.
* Asset allocation: In non-Japan Asia stocks, overweight China, Hong Kong, India, Thailand, Indonesia, Philippines. Underweight Malaysia, South Korea, New Zealand, Taiwan, Australia, Singapore.
* Assets under management: $17.2 billion in Asia Pacific
PIMCO ASIA LTD:
* View: Asia will not see much growth overall because it is still very reliant on developed economies for demand, but should see the effects of reflation in 2010. Like the United States and Europe, Asian governments will enact Keynesian policies to support growth.
* Market strategy: Cost of capital is too high in Asia and there are too many risks associated with emerging markets. Credit spreads in developed world, in particular Europe and the United States, offer better reward for the risk.
* Assets under management: Approximately $15 billion in Hong Kong and Singapore offices as of September 2008.
It's all about "how much you made when you were right" & "how little you lost when you were wrong"