Ask The Experts: Why This Expert Expects Asia Equities To Do Well In 2012
Gan Eng Peng, the Head of Equities at HWANG Investment Management Berhad, shares his outlook on the Asia equities for 2012.
1. What is your outlook on Asia equities for 2012?
The Asian markets have not been doing well for the past 2 to 3 years outside of ASEAN markets, especially in Singapore, Hong Kong and China. This is due to the situation in Europe and the soft economy in US as well as to a certain extent, the continued tightening policies in China which have affected the global markets. However, there has been a turnaround in the market in the last 3 months and he believes that this turnaround is genuine. Thus, he thinks that there should be another 10% to 15% return for the rest of the year for the key Asian markets.
He believes that Asia equities will do well this year driven by proper turnaround in the market.
2. What are some of the key performance drivers of Asia equities?
One major driver would be the stabilisation of China if they can achieve a soft landing; as the country has been trying to slow down for the past 2 to 3 years. The other key driver is specific to respective countries; i.e. if the reform in Indonesia and Philippines continues, then the investment cycle will continue and they will continue to do well. Likewise in Malaysia, if there is a smooth election, then investors will have more confidence to invest in the stock market.
3. What are the key risks of Asia equities?
The Asian markets are very much correlated with the rest of the world. Last year, the Asian markets were affected by the European situation and the soft economy in US. These two factors are still in play and the other risk is the situation in Iran. If Israel makes any aggressive move against Iran, oil price will spike up and affect the rest of the world.
4. Which countries or sectors demonstrate your strongest conviction for 2012 and why?
He thinks Hong Kong and China have the best possible upside, offering the most value. If the Chinese government implements monetary easing, credit cycle will come back and this will be good for stocks in general. He expects this to happen in 2Q or 3Q 2012.
5. Conversely, which countries or sectors do you have the least conviction for 2012 and why?
He thinks that Malaysia has the least upside. Investors are fearful of the upcoming election and they are holding back from investing, especially since the market has held up very well and is not cheap anymore.
6. What is your advice for investors looking to invest or are currently invested in the Asia equities?
He advises investors to buy or hold on to Asia equities. This is because currently, we are in a very good environment to invest in stocks as there is genuine economic recovery in the developed markets.
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