The slowdown in growth in China has left many investors wondering whether Asia can continue to deliver.
But with the Federal Government’s White Paper calling for closer ties between Australia and Asia in the ‘Asian century’, one global investment manager says that the paper simply reinforces his view that investing directly into Asia can provide significant upside for investors, particularly as markets in the US and Europe start to recover.
Craig Mowll, CEO of Certitude Global Investments, says there is no reason to suppose that Asia’s rapid growth over the past 60 years will not continue as GDP for the region is expected to double by 2030.
“The three ‘R’s that underpin growth in China; railways, roads and real estate, are still growing as urbanisation continues. And, as the White Paper identifies, an increasingly wealthy and mobile middle class will continue to fuel domestic demand. Asia will soon be the world’s largest producer of goods and services,” he says.
Mr Mowll went on to say that he has been surprised by the fact that investors are seemingly fixated on the fact that China has not managed to deliver double digit growth this year.
“Even with growth figures of 6.5 – 7.5% for China this year, Asia is looking a whole lot better than the US, which will be lucky to achieve 2 – 3%, or Europe which is going backwards.”
But the situation is set to improve, he says.
“Current commitments by the ECB and the program of quantitative easing in the US mean that growth rates in these developed markets are likely to stabilise going forward, and that is good news for Asia.”
That’s good news because, with the globalisation of world production, emerging markets like Asia receive significant benefits when demand in developed countries increases, and they also receive the associated increased demand from their own region.
“Emerging markets have been heavily discounted in the past year, in part due to economic woes in the major developed economies. But positioning your portfolio for the next phase is critical. Asia is a high beta play on the developed markets – in times of growth, it will receive a disproportionate benefit.”
Mr Mowll concluded by saying that closer ties mean investors should consider investing in Asia directly. “Many Australian investors believe they are accessing the Asian growth story through domestic equities, but they really aren’t getting the most out of the opportunity, particularly considering the challenges we face playing out in the resources sector. Investing directly can provide a greater increase to returns,” he said.
“Now, more than ever, is a great time to invest in Asia.”
