Time to get back into Asia
Investment in Asian equities is increasingly becoming a better investment option despite misconceptions and poor understanding about the market, according to the head of Tuttle Asia Pacific Partners, Tim Tuttle.
Tuttle, who supplies Asian equity investments advice for theGlebe Asset Managementgroup, says the Asian region is entering a growth cycle which is set to stretch from seven to 10 years and investors should consider an allocation to Asian equities.
According to Tuttle much of Asia will face a liquidity surge in the next few years as $4.5 billion is currently held in deposits but this will shift as Asian economies become more consumer orientated and spending increases.
Furthermore he says China will be at the centre of the Asian growth push and that at present investments in that country are showing average returns of 14 per cent with four per cent yields.
“China stands to benefit from an increase in the valuations of its equities but also from an appreciation in its currency which will echo similar growth patterns which occurred in Japan in the 1960s and 70s,” Tuttle says.
Tuttle says concerns about a slowdown in the Asian region, and China in particular, are unfounded as his group has yet to see a decrease in exports, which have grown by 40 per cent per annum, while imports have also continued to grow at the same time.
“This factor and the development of a consumer economy, which should create around 8 per cent growth for the next five years, show no indications of a slowdown in the region,” he says.
“In the global equity market most returns are single digit so cash flows are becoming crucial and at present Asian stocks are paying more than 50 per cent in dividends with growth of 12 per cent.”
Glebe sales and marketing director Julius Gilder says there are significant misconceptions regarding Asian equities which are the result of poor understanding of the markets which has in some cases resulted in investors being burnt through poor stock picking.
However Tuttle says the fundamentals of investing remain the same and that includes purchasing stocks of transparent and well run groups in the region which have low debt levels and good corporate governance.
AUTHOR
Jason Spits
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