Asia Holds 'A Wealth Of Investment Opportunities'

by Phillip Morton, Investors Offshore.com

15 March 2006

While significant market advances have already been made in Asia, there are still an "overwhelming number" of untapped investment opportunities to be found in the region, according to Fidelity International, the investment trust manager.

Although the booming economies of India and China continue to attract worldwide attention, Fidelity International says that investors should not overlook attractive investment opportunities offered by other individual markets, such as Singapore, Thailand, Korea and Taiwan.

Fidelity points to a number of key factors that make Asia (ex Japan) a land of investment opportunity: Asia has 54 per cent of the world’s population but only 14 per cent of the global GDP, highlighting the potential for growth; increasing consumerism as the demographics change, fuelled by births after 1980 and rising per capita income; low correlation between different Asian markets; and China as the region's economic powerhouse.

“Asia is too significant to ignore and should be considered as an integral part of a core diversified portfolio. The region is a rich tapestry of unique and lowly-correlated countries offering substantial scope for investment diversification," observed Stephen Westwood, Head of Investment Trusts, Fidelity International.

"Structural changes in Asia are creating a wealth of opportunities across various sectors. An investment trust such as Fidelity Asian Values offers investors the opportunity to benefit from Asia as it continues to develop," he added.

John Lo, Portfolio Manager, Fidelity Asian Values, Fidelity International, added:

“Equity valuations remain attractive despite a marked increase in equity prices across the region and traditional valuation measures remain undemanding by historical standards and less stretched than those in other regions.

“At a macro level, data releases continue to be robust. Asia continues to benefit from a unique mix of emerging markets with rapid growth potential and developed nations that have historically demonstrated the ability to generate much higher levels of economic expansion than that associated with the western world.

“Companies in Asia remain focused on improving corporate governance and delivering shareholder value. Across the region there has been a marked shift away from grand scale expansion plans in favour of a concentrated focus on the core fundamentals such as cost control, profitability and return on capital. This should enable the region to continue to secure strong foreign capital inflows going forward, as investors become increasingly reassured that the lessons of overcapacity and value-destroying acquisitions, which formerly dogged the region, have been learnt.

“In particular, South East Asia offers an increasingly diverse pool of investment opportunities but continues to benefit from a low-cost labour force and relentless opportunities for external trade, which has helped support strong market performance over the last 12 months.”

Fidelity Asian Values PLC invests in the stock markets of the region’s major economies, such as Hong Kong, Taiwan, Korea and Singapore, as well as the less developed markets of Malaysia, Thailand and Indonesia (ex Japan).

China, which has been responsible for much of the increased economic activity throughout the region, is also represented in the portfolio.

The GBP103 million Fidelity Asian Values Trust achieved a total return of 42.3% in 2005.

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