Investment Strategies
Asia Set For An Explosive Recovery, Financials To Lead - Henderson
Asia is set to make an explosive recovery, according to Andy Beal, fund manager of Henderson TR Pacific Investment Trust, who believes that Asia is better equipped to deal with the economic downturn than most other regions.
Long term, Mr Beal believes that emerging Asia’s prospects remain intact. This, combined with crisis level valuations, means that investors can build the foundations for exceptional returns when recovery does eventually come.
China, with its recently announced £350 billion stimulus package, is tackling the crisis very aggressively - boosting the chances that the country will decouple. The Trust predicts that China’s GDP growth will be around 8 per cent in 2009, while the overall GDP growth rate of Asia is expected to be around 2 per cent.
Mr Beal recognises that China’s contribution is crucial and without it Asia’s expected growth rate would be negative, but points out that this situation is still an improvement on other parts of the world. “Asia as a whole is still expanding while all other regions are contracting,” he said.
He also notes that from its low point at the end of October, the H share Index of Hong Kong listed China shares rallied 70 per cent in sterling terms, while over the same period the MSCI All Countries Asia ex-Japan Index was up 34 per cent.
Henderson TR Pacific Investment Trust believes that the financial sector will be a driving force in leading the way to recovery in Asia, noting that a number of the region’s banks - such as Industrial and Commercial Bank of China, ICICI Bank in India and DBS in Singapore - have strong capital adequacy and good liquidity. As such the Trust’s portfolio has a weighting of 45.3 per cent to financials in the portfolio.
“2009 will be the worst year for Asian economies since 1997/98 with collapsing exports leading to weak economic growth as companies retrench and consumers remain cautious. However, Asia is better equipped to deal with the downturn than most other regions and fiscal and monetary stimulus will mitigate the impact of the export slowdown,” Mr Beal said.
