Aberdeen Standard Investments remains positive on earnings growth in Asia
- Thai investors advised to diversify equity exposure across global and Asian markets
- Technology hardware sector and other key structural trends positioned to help insulate against negative headwinds in the second half of 2021
BANGKOK, 24 August, 2021 – Aberdeen Standard Investments, a leading global investment company, remains positive that improving vaccines access is set to restore growth prospects in Asia in the second half of 2021 and beyond. This is despite ongoing COVID-19 related disruptions, with strong growth expected in company earnings driven by the technology hardware sector and other key structural trends.
Challenges remain as headwinds in Asian markets across the region and in Thailand have become increasingly difficult to navigate because of recent renewed outbreaks.
Ms Pruksa Iamthongthong, Senior Investment Director – Asian Equities, Aberdeen Standard Investments said that the company expects Asian central banks to keep policy loose for now, underpinning the recovery story.
‘We believe vaccination rates will pick up across Asia over the next year as supplies come through, enabling Asian emerging markets including Thailand to reopen and narrow the gap with their developed peers.
“We see many reasons for Thai investors to be positive on the asset class as they look ahead this year. Despite COVID-19-related disruptions, we anticipate solid growth in company earnings driven by the continued demand that underpins the technology hardware sector, helping to insulate it against negative headwinds in the second half of 2021,” said Pruksa.
Some Asian stock markets have seen their share prices run up quite a bit, with concerns around the potential steepening of the yield curve in the United States and its impact on valuations. Aberdeen remains cautious on growth stocks that have already rallied hard with little or no profitability.
“Additionally, Asia remains materially under-owned by asset allocators globally, with the region trading at an attractive discount to worldwide markets despite robust earnings growth,” she added.
As long-term investors, Aberdeen remains most positive on companies with strong cash flows in line with their ability to benefit from structural growth. It advises that companies with healthy cash positions and high Environmental, Social and Governance (ESG) standards are best placed to weather near-term uncertainties.
Robert Penaloza, Head of Thailand at Aberdeen Standard Investments, said, ” As the world battles the coronavirus pandemic and its economic fallouts, investors are increasingly looking to build more resilient and sustainable portfolios. At Aberdeen Standard Investments, we offer Thai investors a wide range of ESG-embedded strategies to help diversify their investment risk and meet their long term goals, from Chinese equity and global smaller companies funds that invest in quality businesses and have delivered strong growth in the past few years, to global dynamic dividend strategy that aims to deliver monthly income stream irrespective of broader market volatility. Looking ahead, we believe equities remain an attractive asset class for Thai investors.”
Most Asian companies have delivered upbeat forecasts for 2021 earnings growth in the latest round of quarterly reporting, and Aberdeen expects dividends to improve as economies further open up.
Pruksa believes the following key structural trends are going to drive Asian equity markets for the rest of the year:
Aspiration: As Thailand’s and Asia’s middle class continues to expand, growth is anticipated in premium consumption in areas such as food and beverage, education, and financial services. In particular, some Thai consumer companies in the small cap space present good investment opportunities.
Building Asia: Population growth in urban centres allied to Asian infrastructure needs, including Thailand’s, improve the prospects for property developers and producers of materials, such as cement and steel.
Health and wellness: Asia boasts leading global companies in biotech and medical device technology. Aberdeen favours companies in contract research, respiratory and sleep care, vaccine development, plus pharmaceutical and diagnostic products.
Digital future: The increasing integration of technology worldwide provides positive tailwinds for Asian companies operating in gaming, internet, fintech and tech services like cloud infrastructure development and computing.
Tech enablers: Asian technology supply chains are well-placed to benefit from structural growth trends in 5G, big data and digital interconnectivity.
Going green: With global policymakers committed to a lower carbon future, there’s bright prospects for companies engaged in renewable energy, electric vehicles, and infrastructure related to environmental management. Grid parity, in particular, is expected to be game-changing.
Notes to editors:
In July 2021, Aberdeen Standard Investments’ parent company Standard Life Aberdeen was rebranded to abrdn. Aberdeen Standard Investments Thailand will also be rebranded to abrdn in September this year, in line with its future-focus and client-led growth strategy. Moving to a single brand approach, from five separate brands, will enable the business to be more operationally efficient, and deliver better return on investment and sustainable growth for its clients in Thailand and around the world.
About Aberdeen Standard Investments
- Aberdeen Standard Investments is a global asset manager dedicated to creating long-term value for our clients. With over 1,000 investment professionals, we manage £457 billion/ US$629 billion* of assets worldwide. We have clients in c.80 countries supported by over 40 offices globally. This ensures we are close to our clients and the markets in which we invest. (*as of 30 June 2021)
- We are high-conviction, long-term investors who believe teamwork and collaboration are the key to delivering repeatable, superior investment performance.
- You can access the Aberdeen Standard Investments media centre here: https://www.aberdeenstandard.com/en/media-centre
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