- Digital transformation and e-commerce
- Environmental sustainability
- Favourable demographics such as growing affluence of middle class and young labour force and mobile-savvy users
Game-changing megatrends in Asia
UOB Asset Management has identified several trends that will drive growth in Asia in the aftermath of the coronavirus (COVID-19) pandemic and shifts in global trade which impact were explored in the second of our ‘Ride the markets with us in 2021’ webinar series on 24 February 2020.
Kicking off the session, UOBAM’s Head of Multi-Asset Strategy, Anthony Raza noted that Asian risk assets – equities, fixed income and currencies – will likely outperform in the coming months pointing out the typical market indicators that generally signal market outperformance for regional risk assets. These include1:
- Performance catch-up stemming from the 150 percentage-point gap between the S&P 500 (250%) and Asia (100%) over the past decade.
- Valuation wise – US currently trades at 23 times future earnings; MSCI World at 20 times forward earnings, while Asia lags at 17 times forward earnings which means more headroom to grow.
- A weak US dollar outlook which almost always bodes well for Asia especially with global trade likely to see strong recovery post-vaccine with US-China trade tensions likely to be toned down and negotiations more measured under the new Biden administration.
- Many Asian economies which have contained and managed the pandemic much better will benefit from the re-opening of the economy.
Paul Ho, Senior Director for Asia Equities looked at how China will likely be the pacesetter in innovations including areas such as electric vehicles, batteries, energy renewables and biotech among others, with spillover effects into other North Asian economies such as South Korea and Taiwan especially in the semiconductor and other IT-related sectors including 5G and the Internet of Things (IoT).
Other speakers, UOBAM CIOs from the rest of the region spoke about the drivers and room for growth for e-commerce and e-financing as well as shifts in foreign direct investment due to supply chain shifts in the wake of the pandemic and trade-related geopolitics which drive exports within and outside of the region.
1Forward-looking statements should not be considered as guarantees or predictions of future events and actual results and events may differ.
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