Allocating to Asia

Summary

• Despite the “emerging” tag attached to many of the key economies and markets in the region, there is ample evidence that the age of Asia is already upon us. The rest of the world is definitely taking notice and China’s increasing representation in global indices is one example of this growing recognition of Asia’s “too big to ignore” status. Through their ongoing reform agendas, a number of key economies in Asia are trying to foster long-term sustainable growth and create an economic environment that appeals to foreign businesses and investments.
• As the globe emerges from the devastation caused by the pandemic (with North Asia leading the crowd), the pillars that support robust long-term growth in Asia – an expanding middle class, increasing urbanisation, and supportive economic reforms – all stand strong, providing a solid foundation for development. To find suitable opportunities in this exciting corner of the world, one must also take heed of the three megatrends that are shaping its structural investment opportunities – demographic change, societal change, and technological innovation.
• Just to give a few examples: an aging population bodes well for Asia’s nascent insurance and healthcare industries that still have ample room for growth relative to their counterparts in the West. An expanding middle class with higher spending power should give rise to higher demand for branded and quality goods. At the same time, Asia’s booming tech sector, which is both a global manufacturing hub for semiconductors and has its fair share of internet giants, places the region at the forefront of the so-called fourth industrial revolution. All these factors, alongside the fact that regional equities and bonds are undervalued and under-represented in world indices – and consequently in global investor portfolios – make investing in Asia a very attractive proposition.
• In this handbook, we delve into the details of the aforementioned topics and outline some evolving investment opportunities across countries/territories, sectors and industries. We aim to provide information that is useful to investors considering allocating to Asia.