Prospects for investors looking to exploit equity opportunities are looking better this year for most of the Asia Pacific economies.
The confident outlook comes from analysts at asset management firm Barings, who say the stepping back from the US ‘fiscal cliff’ is major boost to the region.
They point to the calming of the Eurozone crisis after strong moves by the European Central Bank as beneficial as well.
After a strong 2012, which saw the MSCI AC (All Country) Asia ex Japan Index rise by 22.6%, Barings says another strong performance is on the cards.
That figure compares strongly with 18.6% increase recorded for the MSCI Emerging Markets Index and the 16.8% surge for the MSCI AC World Index.
Strong gains predicted
“Investors should note that Asia was one of the best performing regions last year and that’s despite market volatility caused by events in and outside the region,” said a spokesman for the firm.
“Among the reasons for such growth is that the risks which have affected the markets in recently, particularly the Eurozone crisis, have now been addressed.
“This, we believe, will now help equity markets onto further strong gains this year.”
However, the predictions of low to no growth for many European economies will have implications for exporters in the Asia Pacific though the ECB’s policy of buying government bonds will help avert a bond crisis.
The spokesman added: “On top of this we also believe that the region will see robust economic growth which should translate into strong consumer demand and investment.
“This will help Asia Pacific economies grow at a stronger rate than those in the developed world and in emerging markets.”
Soft landing for China
Barings points to the Chinese economy as underpinning success in the region – and equity markets will be more confident now there is a clearer global economic picture emerging of more stability and growth.
The spokesman explained: “There’s no doubt that China is a major driver for the Asia Pacific economy and we believe that policymakers there have achieved a soft landing for their economy and this year we will see it return to relatively strong growth.”
Barings say they will focus most of their portfolio activities in China to profit from the economic stimulus measures being introduced by the new government regime.
They also point to the economies of Indonesia and Thailand for bringing strong returns as these countries invest in infrastructure and to drive domestic consumption.
Growing global demand for hi-tech devices, like smartphones, will also help power the South Korean economy to new heights ash electronics firms benefiting hugely – though issues with the country’s financial, utility and telecom equities are flagged as concerns.
