The Asean region's continued economic growth and compelling domestic
dynamics support a strong investment case for the region, according to Baring
Asset Management.
It favours markets such as
Thailand, Indonesia, and the Philippines, which the firm believes are home to a
number of companies with attractive growth opportunities at a reasonable
prices.
SooHai Lim, investment manager,
comments, "The infrastructure story has important for Asean economies in
recent years, though the region remains in the shadows of bigger spenders like
India and China. In this regard, we
believe the opportunities this presents are not fully appreciated by investors
and has significant potential to stimulate growth not just in more obvious
markets like Indonesia and the Philippines, but also Malaysia and Thailand.
"In the case of Thailand,
for example, there has been around US$85 billion earmarked for infrastructure
projects in the aftermath of 2011's flood, including a series of new high-speed
railways."
An important investment theme for
2013 and beyond is the growth in the Asean middle class and, by extension, the
rise of discretionary spending power. With the number of affluent middle class
individuals in the region expected to top 160 million by 2015 - over a quarter
of the region's population - Barings believes there are strong investment
opportunities stemming from this positive demographic change.
Lim continues, "Healthcare,
tourism, and retail are all sectors which, we believe, are in a prime position
to benefit from enhanced spending from an expanding middle class with
relatively little in the way of borrowings. Propertyis another strong theme we
favour as we journey through the first few months of 2013, especially as we're
seeing rising home ownership because of falling interest rates across a number
of markets. In this regard, we like real estate developers.
"Agriculture also continues
to impress, especially given Asean's strong share of soft commodity exports
like rice, palm oil and rubber. Growing
for these and more broadly an elevated price environment should benefit Thai,
Malay and Indonesia producers over the medium to long-term."
Though the Asean markets have
performed strongly in the last five years, Barings still believes that there is
room for further steady outperformance, reinforced by strong and large domestic
demand which creates momentum and the potential for a greater resilience
against external economic shocks.
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