The Asian market holds significant potential for long term investors and is set to outperform the United States once the Federal Reserve pauses and starts cutting rates, according to abrdn chief executive officer of investments, Rene Buehlmann.
Buehlmann says that he anticipates a growth desynchronisation between Asia and the US will happen mid-year driven by slowing growth and moderating inflation.
“There is stronger earnings resilience in Asia and the region's earnings for 2024 are expected to grow at twice the rate of the US.
“We believe that investors are likely to reward Asia for its robust earnings growth and lower downgrade risks, and we expect key markets such as Korea, Taiwan, India, and Japan to be the main performers in Asia,” he said.
Buehlmann said that the brightest spots he sees for opportunities in the Asian region are Japan and India.
“The Indian economy is at the initial phase of a cyclical upturn, positioning it as one of the fastest-growing countries on a global scale.
“Driven by significant reforms over the last decade, the Indian bond market has delivered substantial outperformance versus a wide range of asset classes. The Indian bond market outlook remains bright, and this is an opportune time for investors to position themselves in the market,” he said.
“For Japan, we recognise compelling top-down and bottom-up factors driving the equities market, and additionally Japanese companies prioritising profitability and capital return.
“The Tokyo Stock Exchange's efforts to enhance corporate profitability and governance have accelerated corporate restructuring, dividend payouts, and stock buybacks, all contributing to a positive outlook,” he said.
Buehlmann also believes there remains positive signs for a market recovery in China. He believes that current valuations appear attractive, and macro indicators show that targeted policy support is yielding positive results.
“A recovery in consumption services has commenced, with the potential to broaden out as consumers normalise their savings rate.
“A re-stocking cycle is in progress, expected to gain momentum in the coming months and we are optimistic that these developments could restore both corporate and consumer confidence, potentially leading to a sharp rebound in China.
“We remain positive on companies that can adapt to changing regulatory frameworks and align with Chinese policy objectives, particularly in areas such as digital innovation, green technology, affordable healthcare, and improving livelihoods,” he added.
