HONG KONG: Southeast Asian emerging markets are looking increasingly attractive to wealthy Asian investors as they grow less optimistic of prospects in Greater China, a survey showed yesterday.
Thanks to streams of foreign investment from the West and other parts of Asia, Southeast Asia is home to some of the region’s best-performing stock markets this year, shrugging off bouts of volatility which have dragged down far larger markets.
Shares in Shanghai, on the other hand, are among the worst performing in the world behind those of debt-laden Greece, losing nearly a quarter of their value this year.
The ING Investor Dashboard survey showed the Greater China sentiment index fell 14% to 127 in the second quarter (2Q) from the first quarter, though it remained just within optimistic territory. Sentiment on Southeast Asia rose 3% to 141 from the first quarter (1Q).
Overall in Asia ex-Japan, sentiment slipped to 136 in 2Q from 145 in 1Q and was still in optimistic territory. A year ago, it was at 124, having reflected continued optimism since then.
The biggest rise in optimism came from the Philippines, where last month Benigno Aquino III won a presidential election by the widest margin since 1986.
Besides Sri Lankan equities, Indonesia, the Philippines and Thailand are the only other Asian stock markets with double-digit returns this year.
Foreign investors have also been strongly drawn to bonds issued by the two countries, as well as those from Malaysia, attracted by their strong growth prospects and expectations that their currencies will appreciate further.
Among the countries represented in MSCI’s benchmark Asia Pacific ex-Japan index, India and Hong Kong are the first and second-most expensive markets purely on the basis of prices to 12-month forward earnings expectations, Thomson Reuters I/B/E/S showed. The Philippines, Malaysia and Singapore are No 3, 4 and 5, suggesting there may be more value in those markets. — Reuters
This article appeared in The Edge Financial Daily, July 15, 2010.
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