Rob Mumford, Gam Investments
Asian equities have shown cyclical resilience, benefited from “premium” structural growth, and are at reasonable valuations, according to Gam Investments.
“Capital expenditure and trade growth have been extremely strong, and that’s expected to continue this year,” Rob Mumford, investment manager for emerging market equity at Gam, told a webinar this week.
Although consumption has been a laggard in Asia because of Covid-19 restrictions and lockdowns, it should catchup this year and beyond, Mumford said. He suggested that investors gain exposure to the emerging consumer brands in North Asia, as well as technology and new infrastructure stocks.
Core China
In China too, investors should consider increasing exposure to “modern consumer” sectors, financial intermediation, advanced technology and distribution, as well as renewables.
Moreover, China has moved to a countercyclical environment, characterized by monetary easing and fiscal spending, which makes it an exception among leading economies, according to Mumford.
“So within Asia, China at the core is easing policy, which is positive for growth in the region,” he said.
Wendy Chen, senior investment analyst at Gam, added that 2022 is the year of China’s “political reshuffle”, and in previous “reshuffle” years, China has never failed to deliver its economic growth targets.
Green investments, including renewable power, electronic vehicles and biofuels are likely to maintain their momentum, consistent with China’s net zero target, according to Chen.
“Another theme worth looking at is software and services, as the digital transformation in the country continues,” she said.
Southeast Asia
In south and southeast Asia, investors should also focus on the recovery theme, according to Mumford, who highlighted the retail and hospitality sectors in Thailand, industrials in India, and consumer staples in Indonesia staples.
However, “India is more complicated,” said Mumford. “It has a wonderful top-down story, as a beneficiary of geopolitics and sound domestic policy, and booming consumption. However, at the bottom-up level, single stock look expensive.”
