As the economies of the West display anaemic growth, the Asian economies are raring to go. Don't miss out on this growth opportunity.
JP Morgan JF ASEAN Equity Off-shore has been standing tall. The fund tops the list of international funds with a 1-year return of 33%. Actually, it beats every other fund in the market too (barring SBI Mutual Fund’s FMCG sector fund).
Not surprisingly! With the Western economies characterized by anaemic growth, ASEAN appears dynamic and vibrant.
Known as the Association of South East Asian Nations (ASEAN), this geo-political and economic organization comprises of The Philippines, Indonesia, Thailand, Malaysia, Vietnam, Singapore, Brunei, Cambodia, Laos and Myanmar.
Though originally created in 1967, it has now emerged to become the linchpin of economic growth and trade in the region. Foreign Direct Investment (FDI) into ASEAN has risen and is now on a par with FDI into China. No longer is ASEAN marginalized by China’s rise.
Matthew Dobbs, Fund Manager, Asia ex-Japan Equities, Schroders, believes that Asia’s structural growth story remains intact and gives numerous reasons why investors should not ignore the markets beyond China and India. According to Money Week, the minnows in terms of market capitalization, but very much part of the bigger part, are the markets of Laos, The Philippines, Thailand and Vietnam. All of which are doing very well this year. By 2017, Asia Pacific ex-Japan is projected to contribute 35% to global Gross Domestic Product (GDP). Businessorient.com cites studies that reveal that Asia’s rapid and steady growth will produce the largest group of consumers within the next 10-20 years. As most macroeconomic trends point out, Asia will be experiencing more economic power and wealth within the next century, with a relative decline in the West.
Behind the obvious need for public investment in infrastructure, the consumption theme and good demographics, the nations that comprise this 10-member bloc are a very diverse lot and no generalization is justified. On the one hand, there is a very advanced service economy like Singapore. According to the 2012 Wealth Report by Knight Frank Research and Citi Private Bank, Singapore will lead the world in per capita income by 2050.
At the other extreme is Laos,
Cambodia
and Burma.
In between are economies such as The Philippines, Indonesia, Thailand, Vietnam and Malaysia.
Brunei,
a tiny country with a small population is one of the world’s wealthier states
owing to its enormous oil resources. Crude oil and natural gas production
account for just over half of GDP
and more than 90% of exports.
Morgan Stanley believes
that ASEAN markets have the potential to deliver investment-driven growth that
will likely be the key medium-term driver, with Thailand continuing to have the
high visibility of a 12-18 months investment cycle. The firm believes that “a
combination of oligopolistic growth companies and investment-led growth will
continue to drive the Indonesian and Thai markets”. This year, Morgan Stanley
upgraded Indonesia
from neutral to positive and is looking favourably at Indonesian stocks citing
an improved earnings outlook and its belief that a current account deficit
won’t hurt the market.
Jim Rogers is extremely bullish about Burma. He is of the opinion that it
is the best investment opportunity in the world right now because the country
is opening up. He compares the situation there right now to what China was when
it opened up in 1978. Earlier this year, Reuters reported that the US, the European
Union, Canada, Australia and Japan have been loosening restrictions and lifting
sanctions on Burma as the country has started to open up its political system
and free political prisoners.
The best way to access these countries is by investing in a fund which invests in the entire region. JP Morgan JF ASEAN Equity Off-shore Fund is a feeder fund that invests in JP Morgan Funds - JF ASEAN Equity Fund. The fund only invests in stocks of countries which are part of the ASEAN bloc.
This article was first published on http://www.fundsupermart.co.in on March 20, 2013.
The views expressed in this article are solely of the author and do not necessarily reflect the views of Cafemutual.
