From seeing Asia’s trends to knowing markets that stand to benefit
Seeking out opportunities in Asia amid growing wealth, consumption and savviness.
What’s happening in the current market?
The USD has been on a downtrend since March 2020, with the USD index having dropped about 9% since then1.
Why did the USD weaken?
What does a weak USD mean for investments2?
The depreciation of the USD is a key factor in driving asset class performance, but it isn’t the only reason. Hence, asset allocation decisions shouldn’t be made purely based on the strength or weakness of the greenback.
1. A weak USD generally coincides with Asian equities outperformance1
A weak USD can generally create opportunities for risk assets, as this usually happens when broad-based risk appetite in the market increases and the global economy is in expansion. This is a relatively positive environment for EM and Asian assets, both in fixed income and equities.
Periods of USD weakness generally coincide with Asian equities outperformance1 relative to developed markets.
2. Lower currency risks
A weak USD can help manage currency risks2 when investing in emerging markets and Asia, allowing central banks to focus on growth instead of keeping interest rates high to defend their currencies.
How we seek to capture Asia’s growth opportunities3?
The global public health crisis has accelerated some structural trends in Asia even as the region’s long-term growth trends remain generally intact. As global growth starts to recover, the economic fallout from the crisis is likely to persist.
Against this backdrop, how can investors capture the region’s growth opportunities while navigating potential bouts of volatility?
Capitalise on Asia’s long-term structural changes
Lifestyle upgrades: rising income is driving consumption demand
Demographic change: population structure transformation is creating broader investment opportunities
Financial deepening: regional economic development is bolstering demand for wealth management services
A high-conviction strategy with quality and growth
Quality: fundamental, bottom-up, research-driven approach
Growth: focuses on profitable companies with sustainable return potential and growth prospects
A weak USD has helped create opportunities for EM and Asian assets. A bottom-up fundamental research focus can help identify quality Asian corporates and capture potential long-term investment opportunities.