Asian equity sector rated as positive in new funds review

News - Funds

Written by Ray Clancy

Tuesday, 23 February 2010 10:04

Fund managers in the Asia equity sectors believe that companies that can deliver sustainable and predictable earnings streams will demand a healthy premium over those that cannot.

The general view is that macroeconomic factors will play a less prominent role in 2010 than the previous year, and markets will be far more fundamentals driven, according to Standard & Poor’s latest annual Fund Services review.

Managers agree. Samantha Ho said she expects the Chinese market to broaden out at the sector level, but believes that this expansion will be dominated by the market leaders. Agnes Deng at Barings also believes that earnings will drive the market in 2010 led by domestic consumption driven by the growth of the rising middle class.

Throughout Asia the message is upbeat. Sung Woo Kim, manager of the Mirae Korea Equity fund, believes there are a number of companies in Korea that are among the world leaders in their respective sectors. ‘During the review period, Korea was reclassified from emerging to developed market status by index provider FTSE. This buoyed the market’s returns over the period and fund managers foresee another boost if other index providers follow suit,’ said John Monaghan, lead analyst on the South East Asia, Pacific and emerging Asia sectors at S&P Fund Services.

Bratin Sanyal, head of Asian equities at ING, sees the smaller, export oriented economies within the Asian sub-set of countries, continuing to catch up with the other markets within the region. He was particularly optimistic on the prospects for Thailand.

Invesco analysts remain positive on the outlook for India and take the view that infrastructure, consumption and outsourcing will be the key drivers of the economy going forward. They also welcomed the new government’s proposed divestment programme of state owned services and their approach to contain the fiscal deficit.

Standard & Poor’s Fund Services is one of the world’s leading providers of qualitative, forward looking fund management research reports. It is based on in-depth analysis of the funds investment culture, due diligence approach, operational risk assessment, team’s experience, skill, flair and stability, fund specifics and other factors.

The research is also based on an evaluation of qualitative, that is management, investment process and organisation, and quantitative, that is historic performance, portfolio construction and volatility, factors, which may contribute to long term performance.