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Fund selectors warm to Asian equities

Surveys conducted at the FSA Growth Forums in Singapore and in Hong Kong suggest where the region's fund selectors may allocate over the next 12 months.

More than half of the respondents (68% in Singapore and 59% in Hong Kong) said that they would increase allocation to Asian equities.

The second most popular asset class was emerging market equities, which appear to be turning from out of favour to attractive. In Singapore, 45% of the audience said they would raise allocation to emerging market equities in the next 12 months and about the same (46%) said so in Hong Kong.

Analysts are mixed over the outlook on emerging market equities. For example, HSBC Private Bank said emerging market equities are its principal overweight, as profit margins improve and valuations remain compelling. But BNP Paribas Investment Partners said they believe that the forward price-earnings ratio of emerging market equities have jumped significantly and the likely strengthening of the US dollar is a strong headwind. 

Conning Asia Pacific is cautious on emerging market equities, citing vulnerability to moves in the US dollar and risk in China.

Equities over bonds

Turning to asset classes as a whole, equities were the most preferred over the next 12 months when combining the votes from the two forums. Equities are popular despite expected volatility from macro-events such as the Brexit vote this month and the US election in November.

Separating the two locations shows a difference in preference. In Singapore, 36% of the audience favoured equities, followed by alternatives (32%), and property (23%). Only 9.1% preferred bonds.

In Hong Kong, the most preferred asset class was alternatives (52%). Equities were next with 32%, then bonds (10.5%). Only 5.3% preferred property.

The combined total of attendees at the two forums was around 60, with the majority of them fund selectors in Asia. 

Part of the Mark Allen Group.