Investors in Asia Pacific are looking beyond this year’s election cycle to harness the major trends of deglobalisation, disruption and decarbonisation by increasing their exposure to global equities and private equity, according to this year’s Schroders Global Investor Insights Survey.
As much as 61% of investors in Asia Pacific said they are confident or very confident in achieving their return expectations for the next 1-2 years, a similar percentage to their global peers. Hence, 51% of investors in the region will increase their allocation to global equities within the next two years, which is the same percentage as global peers.
However, 40% also said they will increase their country-level equities exposure as well, which is 9% higher than the global average. Moreover, about 4 in 10 (41%) investors in Asia Pacific believe equities are best placed to capture thematic investment opportunities related to disruptive technologies, followed by 36% in deglobalisation, and 26% in decarbonisation.
Meanwhile, investment in private markets continues to grow, with 82% of investors in Asia Pacific already investing in private markets or having plans to do so in the next 1-2 years, similar to that of their global peers. Key reasons for allocating to private markets include greater portfolio diversification and the potential for higher returns.
More than half (53%) of all respondents in the region wish to increase allocations to private equity in the next 12 months, equivalent to their global peers, followed by 48% in renewable infrastructure equity, and 47% in private debt.
Nearly a quarter (24%) of investors in the region believe private markets will be best placed to capture opportunities in disruptive technologies, followed by 20% in deglobalisation, and 29% in decarbonisation.
The survey – which encompasses almost 800 investors in Asia Pacific among about 3,000 globally across a range of institutions – found that the impact of central bank policy (71%), high interest rates (70%) and a potential economic downturn (68%) were the main concerns of investors.
Their views echo their global peers, reflecting a view that macroeconomic conditions will have the most impact on investment performance in the 12 months ahead.
Johanna Kyrklund, CIO, Schroders, said: “As an active manager, it is vital to remain focused on investment fundamentals and not the newspaper headlines. Economic activity broadly remains positive and inflation has been moving in the right direction with major central banks now cutting rates. Lower interest rates are supportive of equity values.”
Specifically, in terms of national policymaking, investors in Asia Pacific said alliances on politics and trade (50% compared with 44% globally), as well as high levels of government borrowing (31% versus 35% global), would most likely impact their investment positioning.
