“There’s a sense that Asian equities are relatively less bad than developed markets,” Crabb said in a briefing yesterday.
“But we are also much closer to the [bottom] point because we have been in a downcycle, so Asia remains very under-owned and very cheap. That means less people would sell if sentiment becomes bearish and potentially more people would use it as a safe-haven going forward.”
Brexit impact minimal
Brexit is unlikely to have a big impact on Asia’s economies, which are taking care of themselves through structural reforms and financial stimulus such as rate cuts in certain countires, he said.
Crabb is particularly positive on India’s industrial sector due to structural reform progress.
“What’s done well in India has been the export side such as IT services, pharmaceutical companies and certain consumption-related sectors. However, we think [the reforms] will drive a lot of fixed asset investments and manufacturing in India,” he said.
Steel, cement, manufacturing, and companies which make car parts are likely to benefit from government reforms, and the stocks have cheap valuations, he noted.
He was also positive on Vietnam’s cement and power companies due to a surge of foreign direct investment in the country.
Still, the biggest risk for Asian markets in the short-term would be Italy leaving the EU, “which would freak out the global markets as it could be seen as Europe’s disintegration.
“The US election will also heighten concerns.”
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Crabb has run the Old Mutual Asian Equity Income Fund and Old Mutual Pacific Equity Fund since October 2014, which are benchmarked to the MSCI AC Asia Pacific ex-Japan.
