AsianInvestor insights: Asset owners plan to raise Asian equity allocations
AsianInvestor's investment intelligence data platform, Asset Owner Insights (AOI), recently conducted a comprehensive survey on asset allocation strategies and future outlook among the leading institutions in the Asia Pacific region.
Among the key takeaways from the survey, 57% of asset owners said they are most interested in increasing their equity exposure in Asia over the next six to 12 months.
"More than half of the asset owners have told us of their interest in Asian equities. We believe this is due to the relatively attractive valuations of this equities segment,” said Kebelyn Lee, research manager at AsianInvestor.
AsianInvestor
The survey, conducted in June 2023, garnered responses from 56 asset owners who collectively manage $1.95 trillion in assets under management (AUM).
The majority of respondents were from insurance companies (48%), followed by family offices (22%) and public pension funds (12%).
Nearly half of the respondents were based in Hong Kong (45%), with Singapore, Thailand, and Korea accounting for another 28%; the rest were spread across the region.
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Within the region, 23% of respondents are most interested in China equities, followed by Indonesia, Malaysia, the Philippines, Singapore, and Thailand (ASEAN-5).
“The PE ratio of HSI (11.64x) and CSI (11.91x) are significantly lower than that of the S&P500 (20.37x) and Nasdaq (30.25x), as of August 11, 2023,” said Lee.
SPOTLIGHT: IT AND HEALTHCARE
AOI's survey found that within the global equity space, information technology is the most appealing sector for asset owners over the next six to 12 months, followed by healthcare.
The information technology sector has significantly outperformed indices and recorded the best year-to-date performance across sectors, according to Lee.
AOI's survey found that within the global equity space, information technology is the most appealing sector for asset owners over the next six to 12 months, followed by healthcare.
The information technology sector has significantly outperformed indices and recorded the best year-to-date performance across sectors, according to Lee.
The appeal of the IT space is largely being driven by the demand for AI (artificial intelligence), which is accelerating at a much faster pace than previously expected, according to Pruksa Iamthongthong, senior investment director of Asian equities at abrdn.
“Nvidia and the server and networking supply chains are among the winners in this rapidly growing market,” Iamthongthong told AsianInvestor.
Abrdn’s equities team is also detecting signs of a potential bottoming of the semiconductor and technology hardware cycle, with green shoots of recovery in some consumer segments, she said.
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“At this point, demand visibility remains low, although the tech cycle is nearing its bottom — with inventory destocking to finish in the third quarter of this year. We are likely to see a recovery in 2024, driven by the end of inventory destocking as well as rising demand for AI servers that could benefit most companies in the supply chain,” Iamthongthong continued.
For global equities in healthcare, there's an innovation-led theme — such as obesity drugs benefitting specific companies with relevant products, according to Xin Yao Ng, investment manager of Asian equities at abrdn.
“Additionally, with concerns around cyclical downturn, healthcare is typically more defensive, so there might be some element of higher interest in the sector from a portfolio perspective,” Ng told AsianInvestor.
For more information on our in-house research insights and for a demonstration of our asset owner intelligence platform, please reach out to Kebelyn Lee at [email protected] and Tim Cresner at [email protected]