Looking beyond the current volatility, investors should be thinking where will the world be in three, five and ten years' time? Which markets will see the most significant changes and developments, and therefore the most growth?
The slowdown in China's economy has undoubtedly caused fears about a slowdown in global growth. In September, however, developed markets such as Japan fell more than Asia, which also outperformed other emerging markets. South Korea and India were among the stronger markets for the month.
We are aware of the macro volatility and the risks, and investors should not ignore these. But the long-term growth drivers win out over the short-term noise.
Indeed, the current volatility represents an interesting entry point into the growth markets of Asia for bottom-up, conviction-led stockpickers. In particular, we are finding lots of undiscovered growth in small and mid caps.
The development of a consumer culture in south Asia – for instance in India, where you are seeing large parts of Indian society coming into the consumer environment for the first time – is driving trends in sectors such as travel, healthcare, consumption, consumer goods and discretionary spend.
Travel and tourism by Chinese consumers is one significant development in our view.
There are more people with the money and inclination to travel around Asia and this is having a strongly positive impact on many new and established companies.
Airports of Thailand, for instance, is in the middle of this change and we are happy to participate here.
Lower commodity prices have been beneficial in terms of lifting household disposable income and at the same time keeping inflationary pressures at bay.
While short-term perceived risk factors such as a stronger US dollar could cause further volatility, Asia has its own internal growth drivers, including favourable demographics, rising consumption, and needed infrastructure investments.
This makes for a promising environment for stock selection.
HyungJin Lee is manager of the Baring Eastern trust
• Key areas of interest include North Asian companies with global competitiveness
• US rate rise could negatively impact sentiment towards Asia
We are aware of the macro volatility and the risks, and investors should not ignore these. But the long-term growth drivers win out over the short-term noise.
Indeed, the current volatility represents an interesting entry point into the growth markets of Asia for bottom-up, conviction-led stockpickers. In particular, we are finding lots of undiscovered growth in small and mid caps.
The development of a consumer culture in south Asia – for instance in India, where you are seeing large parts of Indian society coming into the consumer environment for the first time – is driving trends in sectors such as travel, healthcare, consumption, consumer goods and discretionary spend.
Travel and tourism by Chinese consumers is one significant development in our view.
There are more people with the money and inclination to travel around Asia and this is having a strongly positive impact on many new and established companies.
Airports of Thailand, for instance, is in the middle of this change and we are happy to participate here.
Lower commodity prices have been beneficial in terms of lifting household disposable income and at the same time keeping inflationary pressures at bay.
While short-term perceived risk factors such as a stronger US dollar could cause further volatility, Asia has its own internal growth drivers, including favourable demographics, rising consumption, and needed infrastructure investments.
This makes for a promising environment for stock selection.
HyungJin Lee is manager of the Baring Eastern trust
Bull Points
• Long-term growth story in Asia is intact• Key areas of interest include North Asian companies with global competitiveness
Bear Points
• Ongoing market volatility could escalate, particularly with regards to China• US rate rise could negatively impact sentiment towards Asia
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