Capturing the potential of the future world as we live smarter in the city
The investing potential of the future world – smart cities
Most investors are familiar with the investing potential that Asia offers, and some could already have included at least one Asian market in their portfolios. Seeing that an Asian allocation is now mainstream, is there still more to know about the region’s opportunities?
We employ a diverse range of Asia-focused growth and income strategies to uncover the opportunities and build stronger portfolios1.
Asia’s economic recovery from the fallout of the global health crisis is increasingly broad-based amid effective control of new infections and vaccination progress, alongside continuing structural growth and transformation.
Trends shaping Asia today2
Factors such as the rise of the middle class, lifestyle changes and financial deepening could play increasingly significant roles in Asia’s markets. These structural trends in Asia have continued to evolve despite the economic cycle, and could provide opportunities for capital growth in a global portfolio1.
Additionally, in terms of global equity returns, Asia’s share of market returns have risen despite a challenging 2020.
Accessing long-term opportunities across Asia
Which Asian markets are we considering?
Asian equity market’s recovery has been largely focused on select locations such as Northeast Asia and specific sectors like technology, healthcare and consumer3.
Seeking growth opportunities
As Asia continues to recover, laggards of 2020, such as economies in the Association of Southeast Asian Nations (ASEAN), could enjoy a period of catching-up with their peers in the northeast. ASEAN economies have developed a vibrant yet diverse pool of businesses. Southeast Asia is also well-placed for further supply chain diversification and some long-term structural positives.
Global and Asia equity market returns4
And although Asia’s multiple economies are in varying stages of development, the region is also home to some of the world’s leading companies in their sectors, particularly in consumer, internet and technology.
For example, the adoption and usage of digital services surged during the public health crisis, especially as employees increasingly worked-from-home. The gradual re-opening of economies spurs recovery in select consumer verticals. Digitalisation will likely continue to accelerate as users multiply. And accelerated demand for IT products and services have benefitted market leaders in the region.
Explore growth opportunities
Seeking income opportunities
In terms of income investing, Asia is also a relatively attractive region for high-dividend stocks1. Among the constituents of the MSCI All Country World Index, there are currently 264 Asia Pacific-ex-Japan dividend stocks5.
Improving Asian corporate health and earnings recovery are also supportive of credit markets, in the same way as equities. Asian credit1 also presents relatively attractive opportunities for seeking income, and is a key source of diversification within portfolios6.
Global fixed income opportunities – yields6
Explore income opportunities
Structural trends in Asia have continued to evolve despite the economic cycle, and are providing ongoing potential opportunities for capital growth. Improving Asian corporate health and earnings recovery are also supportive of credit markets. And depending on investors’ investment objectives and risk appetite, these factors help bolster the bigger role that Asia could play in portfolios1.