ASEAN Equity Markets Expected to Recover in 2021; New Opportunities?

While ASEAN’S heavy dependence on tourism and external demand growth have hurt it in 2020, its GDP is sprojected to rebound at a higher rate than the rest of the world (6.2% vs. 5.2% YoY) which is a positive for the region.

ALTIOS shares the implications for its clients and for regional opportunities.

Unsurprisingly, the COVID-19 pandemic has had widespread ramifications on the performance of equity markets all around the world. The pandemic has led to noticeable trends in performance in Asia, as the strongest performing markets have been those who have contained new COVID-19 infections the best, those able to provide significant government cash injections, and those less affected by weak tourism and export demand.  

Yet, variations in equity market performances within Asia and ASEAN have not dampened expectations for the equity market in 2021, as all equity markets across ASEAN have recovered to pre-Covid year highs (albeit within the 10-20% range).  

Another positive for ASEAN is the strong rebound in raw materials and industrial metal prices; China’s strong demand will be a key factor in the rebound of intra-Asian trade growth, and its evolving manufacturing sector can only continue to bolster the ASEAN equity market. 

Finally, recently signed Regional Comprehensive Economic Partnership Agreement should end up being a positive for ASEAN equities which are often used as leverage in regional trade.  

ALTIOS believes that the aforementioned factors point to many opportunities for investors interested in Asian equities, especially agile ones that can pivot to the sectors with the greatest growth in the eventual post COVID-19 environment: technology, consumer staples, utilities, and healthcare. Investors can also look to rebounding sectors, like industrials and financials, for buying opportunities. 

While the business and financial landscape may have been disrupted by the pandemic, ALTIOS looks forward to helping their clients plan their futures and navigate the enticing opportunities that a rebounding market is sure to offer. 

The full article, as reported by Asia Fund Managers, can be accessed here.