Asian economies have strong fundamentals, asset manager says
Updated: 2012-10-10 06:31
By Sophie He(HK Edition)
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Asian economies have significant flexibility for policy maneuver to contain the fallout from structural headwinds in developed countries, while the Asian debt market remains stable with an increasing demand, a top asset management firm said.
"In the face of potential problems in the US, (and) in the eurozone, we think that the Asian debt (market), in terms of positioning, remains defensive," Lian Chia-liang, portfolio manager of the Legg Mason Western Asset Asian Opportunities Fund, told a press conference in Hong Kong on Tuesday.
Legg Mason is a global asset management firm with assets under management of $639.2 billion as of August 31, 2012; the company is headquartered in Baltimore, Maryland. Western Asset is a wholly-owned subsidiary of Legg Mason Inc with assets under management of $445.9 billion as at June 30.
Lian said that despite the slowing growth momentum in Asia, economies in the region still have strong fundamentals.
He pointed out that policy makers in Asia, and China in particular, have yet to loosen their monetary policies as much as the market expected, leaving them with ample room to relax their policies to smoothen the economic growth.
Meanwhile, the demand for Asian debt has also been increasing steadily, backed by the improving trajectory in Asian sovereign ratings, Lian said.
"There have been a lot of other participants, like European pension funds and central banks outside of Asia, looking to diversify into regions of strength, and (they are) looking for high quality assets (like Asian bonds)."
Lian believes that from now to the end of the year and even after that, investors are better off in fixed income than equities, on risk adjusted basis.
"It is less of a question of how equities will perform in the fourth quarter versus the fixed income, but more of a question, which investors like you and I need to ask, of the risk adjusted returns level," he said.
Lian stressed that fixed income, specifically Asian fixed income, lies in the sweet spot that provides the balance between reasonable risks and returns.
He also mentioned that the yuan denominated bonds, or dim sum bonds, offered attractive investment value recently.
Lian said that two years ago, the dim sum bond valuation was stretched, as there was "too much money chasing after too few goods", but in the last 12 months, the situation has gradually reversed.
Although investment enthusiasm in the market seems to have decreased, the valuation of the dim sum bonds actually became more attractive, said Lian, adding that the recent issuances, particularly by some global corporations, had held up very well.
sophiehe@chinadailyhk.com
(HK Edition 10/10/2012 page2)