The firm is overweight these two markets, according to HyungJin Lee, head of Asian equities.
“We like south Asian markets because they offer a very strong growth outlook in the holdings that we have in these countries,” said Lee, who also manages the Baring Eastern Trust product.
He cited Indonesian infrastructure company Wijaya Karya Tbk as an example. It builds roads, railroads and superstructures such as ports, and “will benefit from widespread infrastructure investment in Indonesia”.
Consumer-related sectors are also top of list for the firm. Baring believes that the sectors set to benefit most from strong domestic demand include technology, tourism and healthcare.
The largest overweight sector in the Baring Eastern Trust is information technology, accounting for nearly 27% of the fund’s allocation.
“We remain positive on the technology sector in general in our Asian and, in particular, Korean portfolios,” said Lee.
“South Korea and Taiwan are between developed and emerging economies: there is no political instability and there are many strong opportunities in technology and other sectors.
“Firms such as SK Hynix are right at the centre of the global focus on hi-tech smartphones and consumer demand for more memory, power and processing speeds.”
China’s internet sector is another driver. The mainalnd’s e-commerce penetration rate as a percentage of sales is forecast to be higher than the US by the end of 2015, the firm said.
Intra-Asia tourism is another promising sector in the region, the firm said. Outbound Chinese tourists are driving the trend.
Travel and tourism contributed 8.9% of collective Asia-Pacific GDP in 2013. That is expected to rise to 9.7% of GDP by 2024, Lee said, citing figures from the World Travel & Tourism Council.
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Indian and Indonesian markets are driving the rest of Asia ex-Japan:
