Arab Today, arab today southeast is asia’s safe haven as china and india
Last Updated : GMT 18:51:50
Arab Today, arab today
Arab Today, arab today

Southeast is Asia’s safe haven as China and India

Arab Today, arab today

Arab Today, arab today Southeast is Asia’s safe haven as China and India

New Delhi - Arabstoday

Little more than a dozen years after the region’s crippling financial crisis, Southeast Asia is looking more a safe haven than a risky bet, with foreign investors souring on China and India and pouring money into markets proving resilient to the global gloom. Short-term investors in Southeast Asian stocks and bonds are being overtaken by those with a longer-term horizon, signaling growing confidence in a region of 600 million people that boasts a rapidly growing middle-class. Foreign investment in regional funds is at a record high. Assets managed by offshore mutual and exchange traded funds dedicated to Southeast Asia rose to more than $ 26 billion in March, according to an analysis of Lipper data. Four-fifths of the assets are in actively-managed funds, with the rest in shorter-term ETFs. Those levels have dropped following a 5.6 percent fall in the MSCI Southeast Asian share index in April-June, hit by the global market slowdown. Stock valuations remain high, one reason for investors to be cautious. Still, the March figure was more than triple the low hit after the financial crisis in 2008. By comparison, funds dedicated to China and India are roughly 30 percent below pre-crisis levels and falling, the data show. China fell to $87 billion at end-March. “It’s a structural change in terms of the way investors perceive the market,” said Rajesh Ranganathan, a portfolio manager at Hong Kong-based hedge fund Doric Capital, which has invested in Southeast Asia for over a decade. “Today, India and China are the places where people are looking for beta (risk) and Indonesia and Thailand are the places where people are hiding.” The shift comes as a rising middle-class of consumers crowds malls from Manila to Phnom Penh, helping a region with a combined economy of $2 trillion wean itself off a dependency on US and European demand for exports. Improved competitiveness versus China, strong state spending on infrastructure and better fiscal management have added to the region’s pull. Underpinning the investment thesis is steady economic growth. Indonesia is set to grow 6.5 percent this year. The Philippine economy raced ahead at a 6.4 percent annual pace in the first quarter, its fastest in a year-and-a-half, fueled by strong consumption and state spending as President Benigno Aquino moves to upgrade decrepit infrastructure. Even the region’s “frontier” economies like war-scarred Cambodia are moving on to investors’ radar as their own middle- class, albeit small, expands rapidly. Two of the world’s largest insurance companies announced plans to open in Cambodia this month. In contrast, Europe is mired in a debt crisis, the US is hobbling, and China is showing signs of a slowdown. Longtime emerging-market darlings Brazil and India are in a relative slump, with growth seen slowing to around 2 percent and 6 percent respectively this year. “Southeast Asia is coming into its own after being eclipsed by China for almost 10 years,” said Frederic Neumann, co-head of Asian economic research at HSBC. Fidelity’s ASEAN fund breached the $ 2 billion level in June, multiplying its assets by more than six times from its post-crisis low and becoming the biggest offshore fund focusing on the region, according to Lipper data. Estimated net flows into offshore ASEAN funds stood at $ 1.4 billion in 2012 through June, according to data reported until July 10. By comparison, China and India offshore funds saw net outflows worth $ 1.6 billion and $ 185 million respectively. “The consumption story in Indonesia, Malaysia, Singapore and Philippines remains intact. And the demographic picture is not as bleak as North Asia,” said Alex Hill, co-founder of Singapore-based hedge fund Tantallon Capital. In the past, Southeast Asian markets were among the first to suffer from investor risk aversion during periods of global economic uncertainty. Their current resilience shows that perception is changing. Since the 2008 financial crisis low, MSCI Southeast Asia shares are up 150 percent. Improved economic management is also attracting investor interest. Countries like Indonesia and the Philippines are reaping the benefits from paring down debt and keeping their budget deficits in check in recent years. Indonesia received investment grade status last year and many are tipping the Philippines to be next as Aquino makes progress in battling corruption and tax evasion. Low interest rates are enabling governments to raise spending on infrastructure — one of the region’s big weak spots. That promises major spin-off benefits for companies as governments move to liberalize their economies, turning state-run companies into private enterprises. Malaysia’s $ 444 billion Economic Transformation Program aims to attract 92 percent of its targeted investment from the private sector. The country is poised to topple Hong Kong as Asia’s top IPO destination for 2012, partly due to the state’s divestment of its stake in palm oil giant Felda. “That (liberalization) dynamic is not something that’s repeated elsewhere in the world,” said Edward Teather, regional economist at UBS. “If anything, things are going the other way.” Some economists see the upswing as a temporary wave of exuberance that risks losing momentum without deeper reforms. The rise in consumer spending has been partly fueled by easy personal credit in countries such as Indonesia and the Philippines and by strong fiscal spending in others, such as Malaysia and Thailand, said HSBC’s Neumann. “Increasingly we have to ask ourselves really hard questions as to how sustainable is this process and how we can put growth in ASEAN on a much more sustainable trajectory,” he said. One problem facing investors is that markets in Southeast Asia already seem to have priced in much of the good news, and the region is vulnerable to short-term wobbles. A recent drop in the Malaysian ringgit was a flashing red light for foreign investors who own nearly 40 percent of the local bond market, and the Philippine central bank last week tightened rules on its short-term special deposit instrument, which has attracted $ 40 billion of funds, to tackle speculative, or hot money. Indonesian shares trade at three times book value and their Philippine counterparts are at 2.6 times, making them the most expensive markets in the Asia-Pacific region, according to data from Thomson Reuters StarMine. India trades at 1.9 times and China 1.8 times. Opportunities are also narrowed by the region’s relatively small variety of companies compared to India and China. The share trading volume for the region totaled $ 317 billion in 2012 through May, just 4.8 percent of the Asia-Pacific total, data from World Federation of Exchanges shows. Myanmar’s rapidly opening, resource-rich economy is one of the world’s most exciting investment stories, but its lack of a modern banking system or financial markets puts it mostly out of reach for fund investors. That highlights another problem for investors buying the diverse region of 10 countries as a basket. Cambodia has little in common with Singapore beyond ASEAN membership. Indonesia’s youthful population is not matched by Thailand’s older demographic profile. Malaysia, Thailand and Indonesia have exposure to commodity markets which other ASEAN countries lack. Despite a vibrant consumer class and a young population, Communist-run Vietnam’s economy has gone off on its own tangent in recent years as it grapples with high inflation, debt-ridden state firms and a debilitating trade deficit. “We believe the opportunities are there, but we can’t expect the positive trends in ASEAN can replace what we are seeing in China and India overnight,” said William Yuen, an associate director at Invesco and portfolio manager of the oldest ASEAN-focused fund. “(The) GDP of China and India combined is too large for ASEAN countries to take over in the short-term.” From arabnews

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today southeast is asia’s safe haven as china and india Arab Today, arab today southeast is asia’s safe haven as china and india

 



Arab Today, arab today
Arab Today, arab today Prepares to present her new collection

GMT 14:29 2017 Monday ,20 February

Prepares to present her new collection
Arab Today, arab today Tourism shows signs of recovery

GMT 09:59 2017 Monday ,20 February

Tourism shows signs of recovery
Arab Today, arab today To release new antiques collection

GMT 20:33 2017 Friday ,17 February

To release new antiques collection
Arab Today, arab today Optimism on the front line

GMT 07:24 2017 Monday ,20 February

Optimism on the front line
Arab Today, arab today Murder of 2 reporters in Dominican Republic

GMT 22:45 2017 Thursday ,16 February

Murder of 2 reporters in Dominican Republic

GMT 07:16 2017 Monday ,20 February

Global arms trade highest since Cold War

GMT 06:10 2017 Monday ,20 February

Tourism shows signs of recovery in Egypt

GMT 05:45 2017 Monday ,20 February

Brexit U-turn ruled out by many in EU

GMT 16:23 2017 Sunday ,19 February

Global energy news

GMT 16:05 2017 Sunday ,19 February

Trudeau calls for wider social benefit from economy
View News in Arabic - Business: نفط وبتروكيماويات
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today Kidogo provides childcare for underserved

GMT 20:24 2017 Wednesday ,15 February

Kidogo provides childcare for underserved
Arab Today, arab today Tragic fluctuations of Bakhtiari's life revealed

GMT 06:50 2017 Wednesday ,15 February

Tragic fluctuations of Bakhtiari's life revealed
Arab Today, arab today London to tax old cars

GMT 14:06 2017 Friday ,17 February

London to tax old cars
Arab Today, arab today Pluto's unruly moons

GMT 06:31 2015 Thursday ,04 June

Pluto's unruly moons
Arab Today, arab today Nissan enhances sales in most markets

GMT 14:08 2017 Monday ,20 February

Nissan enhances sales in most markets
Arab Today, arab today Competes Sweden and Germans by S90

GMT 22:36 2017 Thursday ,16 February

Competes Sweden and Germans by S90
Arab Today, arab today Egypt to hold first session of Arab film festival

GMT 21:11 2017 Saturday ,18 February

Egypt to hold first session of Arab film festival
Arab Today, arab today Teach monkeys to recognize themselves in mirror

GMT 20:41 2017 Wednesday ,15 February

Teach monkeys to recognize themselves in mirror

GMT 07:30 2017 Saturday ,18 February

Actress Nadeen Al Rassi views art as her entity

GMT 06:40 2017 Friday ,10 February

MP calls for removing text from Islamic story

GMT 19:10 2017 Friday ,17 February

Hats, scarves add beauty to women

GMT 10:26 2017 Tuesday ,14 February

Emergency UN meeting in Harare

GMT 14:04 2017 Tuesday ,14 February

"Lagom" new Swedish concept in interior design

GMT 21:49 2017 Thursday ,16 February

Scientists develop new therapy

GMT 19:16 2017 Friday ,17 February

Aziz House ready to host the tourists

GMT 13:12 2015 Saturday ,09 May

Sheikh Sultan opens Sharjah Centre

GMT 12:39 2017 Monday ,20 February

newest smartphone another winner for Huawei

GMT 13:16 2017 Tuesday ,14 February

First fashion model with Down syndrome
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday