Fund managers are optimistic on prospects for Asian equity markets and the emerging markets in 2011, according to a report by the wealth management unit of OCBC Bank.
“Most fund managers were more optimistic about the economic and earnings outlook for 2011 compared to this year,” said Vasu Menon, vice-president of wealth management (Singapore) at OCBC. “Optimism about Asia and emerging markets was especially evident as these regions have better growth prospects compared to their peers in developed markets.”
Fund managers are generally more positive on equities over other asset classes, with one stressing that interest rates would remain low, which will mean liquidity for stock markets.
The more popular picks for Asian bourses include Indonesia, given its large domestic economy, as well as China and India, considering their strong domestic economies said fund managers including ING Investment Management and UBS Global Asset Management.
However, Aviva Investors considered the South Korean bourse as the “most attractive Asian market at present” on the back of reasonable valuations and a strong economy.
Some fund managers also warned that developed markets should not be ignored either.
Henderson Global Investors favour a barbell strategy of exposure to Asia together with an allocation to higher-yielding quality stocks with good business models from the developed markets.
“One part of that strategy should deliver favourable growth, while the other has the potential to deliver encouraging income through access to firms with strong, stable franchises in the West,” said Henderson.
Fund managers also see many opportunities particularly among emerging and Asian market bonds denominated in local currencies.