Re-evaluate view on Asia, says Nikko AM

Speaking in Sydney yesterday, Nikko AM head of Asian equities Peter Sartori said Asia is evolving rapidly and investors should no longer view the region as a “cheap manufacturing hub”.

“Investors have for some time looked at Asia as a straight growth story, but that isn’t the case anymore,” Mr Sartori said.

“In our view, it is the quality of growth that matters – as ‘old Asia’ evolves into ‘new Asia’, investors need to consider where growth will come from in the future.

“Taking into consideration demographics, wage growth and a burgeoning middle class, healthcare, tourism, insurance and the environment are the areas that we believe will continue to drive equity market re-ratings and investment returns,” he said.

Mr Sartori also said Asia has been a “big winner” from significantly lower oil prices.

“Of the 10 core markets we invest in, only Malaysia suffers from the lower oil prices, while the other nine benefit,” Mr Sartori said.

“Both India and China are major winners – the recent roll-back of fuel subsidies in both India and Indonesia are an early sign of the benefits of the lower oil price playing out across the region,” he said.

Also speaking in Sydney, Nikko AM head of Australian equities Brad Potter said in 2015 he expects to see increased capital investment in the non-mining sector as business confidence increases.

“Despite accommodative interest rates, businesses have not been sufficiently persuaded to invest, much to the frustration of the RBA,” Mr Potter said.

“A recovery in consumer sentiment and spending may provide the impetus for this to occur.

“Companies are well positioned to invest, with very strong balance sheets, low gearing and record levels of cash,” he said.