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Luke Ng, FE Fundinfo
Equity markets in Asia Pacific ex-Japan have struggled this year, as investors have feared the effects of the protracted Sino-US trade conflict on the region’s export-led growth.
The benchmark MSCI Asia ex-Japan Index rose 10.79% for first 10 months of the year, but significantly underperformed the MSCI World index (19.94%) and the S&P 500 (23.16%) in US dollar terms, according to FE Fundinfo data.
However, there has been a notable exception to the trend.
The CSI 300 index of China A-shares has posted a 29% return so far this year, helped by inclusion in global indices which has attracted passive inflows, as well as active investors seeking exposure to stocks likely to benefit from China’s transformation to a domestic consumption growth model.
Indeed, China equities saw a 60% increase in positive sentiment among fund selectors in Hong Kong, Singapore and Thailand in the third quarter of this year, according to Last Word Media research.
There was also a more encouraging 15% upward shift in positive sentiment towards Asia-Pacific ex-Japan equities in general, which contrast with a decline in demand for developed stock markets, including the US.
Fund managers with Asia-Pacific ex-Japan mandates have to juggle their concerns about the impact of tariffs on the region’s economies with their faith in expectations of long-term growth and prosperity.
FSA asked Luke Ng, senior vice president and head of Asia research at FE Fundinfo, to compare two Asia ex-Japan equity products: the Investec Asian Equity Fund and the JP Morgan Asia Growth Fund.