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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

Altios shares our take on the RCEP and what this means for us and our ecosystem.

The Regional Comprehensive Economic Partnership (RCEP), said to be the biggest trade agreement to date, extends existing trade agreements signed between the ten countries of ASEAN (Singapore, Indonesia, Philippines, Vietnam, Malaysia, Thailand, Laos, Myanmar, Brunei, Cambodia ) and combines them into a multi-lateral agreement with Australia, New Zealand, South Korea, Japan and China. This deal represents around 25% of global international trade and 30% of the global GDP in value, reaching population of 2.3 billion individuals.

Details of the deal have not been published yet but will include bilateral tariffs, import taxes reductions, less constraints on FDIs, ease on regulatory aspects to export and/or invest within the RCEP area, and strengthen regional supply chains. These clauses will be greatly applicable in areas such as trading, e-commerce, intellectual property, test certifications, and technological cooperation.

The deal aims to promote multilateralism and free trade in Asia, and balance trade exchanges within the region. Some may also argue that this is a geopolitical move on China’s end to send a strong signal to the U.S.

There are however still some questions left unanswered: will India give in and sign the agreement and how will Australia-China trade relations develop in the future?  India had pulled out of negotiations last year but RCEP members said they remained open to India’s accession later. The country is currently protecting its domestic industry as lower tariffs could impact local producers, especially those in agriculture.

As for Australia  and China, experts says the RCEP won’t make any difference regarding trade tension between Australia & China, and we will have to wait for further detailed measures to judge since tariffs between two countries are already low.

ALTIOS believes that the RCEP would greatly help their clients due to the further strengthening of the Asia’s position as the global economic center of gravity and development of intra-Asian trade. This will give more accessibility to regulated or highly taxed industry sectors in China, sign that China is opening up to multilateralism. Furthermore, this will create opportunities for strong national industries in the region like cosmetics and F&B in Australia and promote these industries within the RCEP region. Country specifications can be organized to optimize regional trade, as China will open up to import more food and commodities providing great opportunity for ASEAN countries, and also open up its automotive sector, which is promising for Japan and Korea.

The full article, as reported by the Financial Times, can be accessed here.