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Anthony Raza: Asia’s Still Gold, Here’s Why.
Aspire, Thought Leaders | 18 February 2015
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By: Elaine Lee
Articles (11) Profile

The possible rise in interest rates has left many worried that it might lead to Asia’s undoing. On the other hand, Senior Director of UOB Asset Management, Anthony Joseph Raza, believes Asia had been overlooked by investors.

Even with the missed earnings forecasts, Asian companies still managed to outperform US companies by producing final results with higher growth than their US counterparts.

Based on his perspective, this is Asia’s year!

The Strong US Dollar To Be Asia’s Bane?
With the US dollar getting stronger, many are concerned that funds might move out of emerging markets, such as Asia. This will subject investments in Asia to volatility.

In response, Anthony compared the similarity of the nineties period to current markets. Asian equity markets were strong back then but ended the decade in a crisis. He explained that, “Even in a strong dollar world, it doesn’t mean that Asian markets have to underperform”. The fact that Asian countries have a head start with cheap currencies against the US dollar, it naturally benefits Asia in the current economic situation.

Oil Price Slump To Benefit Many Asian Countries
The sharp decline in world’s oil prices could well provide a positive stimulus to Asia Pacific’s economic growth in 2015. The low oil prices will boost much of Asia’s regional GDP growth and lower inflationary pressures.

Since most of Asian economies are large net importers of oil and gas, many countries will benefit from lower oil import costs and discounted fuel costs for consumers. Even countries that are oil exporters, like Indonesia and Malaysia, have been able to carry out fiscal reforms by removing fuel subsidies without the effects of said removal being felt by the end consumer.

Deemed as the largest manufacturer of Asia, China have seen growth momentum during recent quarters. Low oil prices helped decrease energy cost in manufacturing industries and allowed s reduction in the country’s oil import bill, boosting the Chinese net exports.

Also one of the main beneficiary of low oil prices, the Indian GDP is forecasted to increase from 5.5 percent in financial year 2014 to 6.6 percent in 2015.

Healthcare Stocks In Asia – IHH Healthcare
If there is one sector that is recession proof, it would be the healthcare sector. With the aging population, investors are rushing into the booming healthcare businesses especially in China and India.

At present, IHH Healthcare (IHH) has a hospital in Shanghai and several other clinics in China. Boasting further expansions, Chairman Abu Bakar Suleiman of IHH remains positive about health care reforms in that country.

In recent news, IHH and TPG Capital Management were vying to buy India’s Global Hospitals in a deal that would value the privately owned chain at $350 million.

As Asia’s largest hospital operator by stock market value, an investment into Global Hospitals would mark a further expansion into Indian healthcare. This will add on to IHH’s Indian exposure. The company currently has an 11 percent stake in Apollo Hospital Enterprises, India’s largest private hospital chain.

Source: FactSet, chart showing analysts' updates on IHH Healthcare over 1 year

At CIMB, they believe increasing dividend payments could become a priority since IHH has a healthy net gearing and upbeat outlook. Medical tourism and contributions from Turkish operations are also potential catalysts.

In the later half of year 2014, IHH has been outperforming its target price for a majority of the period. Surpassing target price at $5.26 RM in the current month, the stock has been hovering over a range of RM4.50 to RM5 for most part of the year. While this might appear to be dangerous to some investors, readers must understand that investing into IHH brings about 3 positives:

  1. The resilience of the healthcare sector in times of financial turmoil,
  2. IHH’s growing dividend profile,
  3. IHH’s prospects of growth in both India and China, two of the largest economies in Asia.

Technology Stocks – China Mobile
China Mobile Communications Corporations (CMCC) is the largest mobile telecommunications company by market capitalization today. At a market cap of $230 billion, CMCC surpassed S&P 500 slightly in 2014, setting it apart from other Chinese companies.

As a state owned telecom giant in the most populous country, it possesses both stability and great growth potential. CMCC set a year-end target of 50 million 4G subscribers by 2014 and managed to top that measure early.

With a dividend yield of 3.4 percent and projected earnings of about $4.30 per share this year, distributions are still about 45 percent of total profits. This projects a long term potential growth in dividends. Long-term investors who are patient enough to ride out its short term volatility will most probably be rewarded.

Source: FactSet, chart showing analysts' updates on China Mobile over 1 year

The start of 2015 has been upbeat for China Mobile as it steers towards an uptrend direction.

With the recent spike in their stock, the company topped its target price at $106.70. This could well be due to rumours of a merger between China Mobile and a provincial telecoms firm in Sichuan Province, as reported by Reuters.

Although underperforming for most part of the last quarter in 2014, most analysts remain positive of a potential rise in price and value of the company.

Elaine Lee is a staff writer for Aspire. She is currently pursuing a degree in Economics and Maths with the University of London.

Please click here for more information about this author.

IHH Healthcare  1.830 -- --   
Business: One of the largest listed private healthcare providers in Asia and worldwide. [FY18 Turnover] Parkway Pantai (64.7%), Acibadem Hldgs (31.9%), IMU (2.2%), PLife REIT (1.2%).

Insight: May-19, 1Q19 revenue rose 27.6% as a result of the... Read More


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