Investors are not giving sufficient credit to the Asian growth story as the region merits a higher market premium, according to Andrew Gates, senior international economist and executive director of UBS Investment Bank.
Mr. Gates, who was speaking at the inaugural INVESTFair 2010 conference ‘Riding The Regional Recovery’, which was jointly organised by ShareInvestor and The Business Times, said Asian firms have greater latitude to deploy leverage, complete major buyouts and expand balance sheets.
“We don’t think the market’s actually giving this Asian growth story the credit it deserves,” said Mr. Gates. “Asia’s on high growth, low balance sheet risk regime. It should be commanding a significant premium.”
Participants of the conference got a glimpse of the present opportunities from the panel discussion on investments, where representatives from telecommunications, agriculture and media industries presented their views.
Asia is likely to have greater growth prospects, more capital formation and increased need for capital financing, said DBS Group CEO Piyush Gupta, who was optimistic on Asian banks. Asia’s M&A pipeline also seems strong as more Asian firms are having global aspirations.
“By and large, the financing and credit appetites of global institutions are somewhat limited and likely to be so in the medium term, and it’s a great opportunity for Asian banks and Asian institutions to step up and fill that gap,” said Mr. Gupta.
Other investment ideas that are worth considering would be asset and wealth management, infrastructure, luxury goods sector and firms with a regional distribution platform, he added.
However, the Asian growth is subject to risks, with Sunny Verghese, chief executive of Olam International, citing increasing competition and increased trade protectionism among the risks in his sector. Alan Chan, chief executive of SPH, also noted that international disputes and other political risks still persist.
Mr. Gupta also noted that double-dip recession could lead to long-term slow growth in the West, affecting Asian economies such as Singapore, Malaysia and Hong Kong, which have close associations with the West.
The two-day INVESTFair 2010 Exhibition held at Marina Bay Sands Convention Centre attracted 50 exhibitors and sponsors, including financial institutions, education providers and listed companies.