As Fed bets are repriced, global fund managers look at cheap China; haven plays in Korea, India & Japan
Chinese stocks and driving value investment strategies in Asia.
Corporate reforms in Japan and South Korea will support a value thesis, according to JPMorgan Asset Management and AllianzGI. Meanwhile, M&G Investment Management is attracted by near record-low valuations for Chinese stocks. Other haven plays are exporters and India’s domestic-driven equities.
Having started the year brimming with hopes that the Federal Reserve’s easing will lift markets across Asia, multi-asset managers are now turning more selective under a drastically different environment. A hawkish pivot by the region’s central banks to protect their currencies has sapped the appeal of bonds, a traditional safe haven, putting the onus on stocks to deliver returns.
“Higher rates for longer do pose headwinds to capital flow into Asia,” said Gary Tan, a portfolio manager at Allspring Global Investments. In this environment, “some domestic-focus sectors could be safe havens” such as Indian infrastructure stocks, Korean reform beneficiaries and China’s domestic consumer and utilities plays, he added.
The latest market pricing indicates the Fed will start easing in November, a far cry from earlier bets for as many as six cuts in 2024. Foreign funds have sold more than $7 billion worth of equities in emerging Asia excluding China so far in April, according to data compiled by Bloomberg, on track for the first outflow in six months.
ETMarkets Smart Talk: Interesting opportunities in long-term government bonds market: Amit Goel
Th
