Baring Asset Management expects to double its investment in Asia to US $8 billion over the next four years thanks largely to compelling growth stories in Japan and China, a senior executive said on October 05.
"It would be hard to see any other markets growing as swiftly as Asian markets," said Michael Hughes, chief investment officer of Baring Asset Management in an interview with Reuters.
Hughes, who joined Baring seven years ago and became CIO in 2000, said it was likely that Baring Asset Management would double its investment across Asia to about US $8 billion within four years, up from US $3.5 billion-US $4 billion at present.
He is on a visit to the region to assess his firm's product mix and to gauge whether rocketing Asia stock markets signal a short-term boom or the start of a long growth story.
So far this year, Japan's benchmark Nikkei index is up nearly 20 percent, South Korea's KOSPI is up over 37 percent, tapping record highs. Hong Kong stocks have gained nearly 7 percent versus a 3 percent fall in the blue-chip Dow Jones industrial average in the United States.
Baring Asset Management currently has about eight key equity funds with Asia components including a Japan fund as well as a Pacific fund and is considering developing a global currency fund, which would have an Asian currencies component. Asia investments account for more than half of its global emerging market fund.
Companies it is invested in include South Korea's Samsung Electronics Co Ltd, China's largest oil producer PetroChina Co Ltd and Japanese banking giant Mitsubishi-UFJ Financial Group.
"Is this the beginning of 10-15 year outperformance? I think it is. The strength here is going to lead to re-rating of markets. Rates of return on equity this year have exceeded the rest of the world," said Hughes, who manages $36 billion in assets.
Hughes cited high growth, low valuations and rising domestic savings flows as key factors boosting the region's markets, along with a "solid" macro building block.
He said a severe downturn in the United States was the biggest worry for investors in the Asia region. He believes those concerns are "overdone".
"One thing stands out. The only thing that people are fearful about here is about America. All the domestic things are fine," Hughes said. Hughes expects the Asia region to benefit from growing interest among Middle East investors for Asian equity funds.
"You are talking billions. Partly because they have had a liquidity injection. But they've also always like property and I think it's on a pretty big scale here," he said.
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