Greece's sovereign debt crisis has plagued Europe and shaken market confidence, but it has also strengthened the case for Asia as a long-term investment destination. That might be difficult to see now following a heavy sell-off in Asian stocks and bonds in the last two weeks and as investors load up on safe-haven assets like gold on concern that Europe's currency union could be at risk of crumbling.
However, Asia's stable growth prospects, relatively sound government finances and healthy corporate balance sheets mean the region will likely see a shallow correction and emerge in the medium term as a more attractive place in which to invest compared with western developed economies.
"Until a few years ago, Asia was considered a risky place, where you look for yield and when things are good, you look outside into emerging markets. That view has been changing over the last crisis," Rajeev De Mello, head of Asian investment for Western Asset, which has some $482 billion under management.
"Asia is a much sounder place than other parts of the world," he said in a Reuters Insider interview. De Mello believes the $1 trillion emergency plan to stabilise the euro zone and the European Central Bank's government bond purchases, similar to the effective quantitative easing by US and British authorities, will result in more money finding its way to Asia for higher returns.
He is looking to add to his overweight position in Indonesian local sovereign bonds after yields shot up to one-month highs last week and has a positive view on South Korean government debt on expectations the Bank of Korea will not raise interest rates very soon.
Underlying a bullish case for Asia are improving economic fundamentals that will mean less government borrowing and more stability in the face of crisis. Between 2008 and 2009, Asian countries significantly improved in a ranking of economic strength by Thomson Reuters Datastream based on real gross domestic product growth, unemployment, terms of trade, current account balances and foreign direct investment.
In 2008 when the financial crisis truly went global, three of the top 10 countries were Asian. A year later, not only were five of the top 10 Asian, but China, India and Malaysia took the top three spots.
The United States, Germany, France, Italy and Britain were all in the bottom third of the 32 countries in the study. Brazil, China and India are forecast slip down the rankings in five years while Southeast Asian economies move up, based on five-year projections from the Economist Intelligence Unit. Russia, Malaysia, Indonesia and Thailand and Egypt will be the top five in 2014.