The Dutch pension asset manager's Asia Pacific head of real estate says his team has just had one of its busiest years ever and that 2021 is looking similarly promising.
ôAt every point in a crisis, as I have experienced over the past 20 years, there comes a time when you can begin to see a silver lining,ö says the London-based Monson.
Monson, who was in Hong Kong recently, notes the world is now reliant on Asia as the engine of global demand. He is optimistic that core Asian economies, and particularly China, will manage the crisis, noting that the mainland is well positioned with minimal internal and external debt. ChinaÆs growth will be dependent on domestic demand, with exports to slow sharply due to a recession effect outside Asia, he says.
Asian economies will be helped by reduced inflation rates due to falling commodity prices and real oil demand destruction in the US, he notes, adding that while growth rates in the region will slow, stocks are undervalued.
For the 700 largest listed Asian companies, financial leveraging has fallen from 65% to 22%, the lowest level in the world, according to Sarasin. Some 40% of Asian stocks pay higher dividends than the government bond markets, with that rises to 80% for Singapore stocks.
Meanwhile, the unprecedented government actions over the past week have resulted in the creation of hybrid half-state half-private sectors that will provide interesting bond opportunities for investors, Monson says.
Sarasin recommends the high-quality corporate bond markets including: the emerging hybrid bond markets; defensive stocks (utilities, water, food, and particularly pharmaceuticals); and energy and materials (metals and mining).
Mega players Nippon Life and Dai-ichi Life are looking for opportunities in higher-yield single-A US corporate bonds, which offer more appealing yields than stagnant domestic offerings.
The “lower for longer” monetary policy and stimulus packages, coupled with the rolling out of vaccine programmes favorably support real estate investing in the region, with offices and data centres presenting forward-looking opportunities.
As US fixed income default rates rose and yields fell during the pandemic, are Asian bonds, which have had more stable yields through 2020, looking more attractive?
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