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Mark Mobius: A Pivotal 2015 For ASEAN Countries
Aspire, Thought Leaders | 12 June 2015
By: Lim Si Jie
Articles (169) Profile

The role of Association of Southeast Asian Nations (ASEAN) members and their markets in the global economy has grown significantly in recent years. Many ASEAN countries have made fundamental and infrastructural improvements to their economies.

This trend of ASEAN markets gaining a role of growing importance in the global economy is expected to continue into the future. Southeast Asia has been among the most exciting investment destinations available to emerging and frontier market investors.

Pivotal Year For ASEAN

Mark Mobius, who is currently the emerging markets fund manager at Franklin Templeton Investments, believes that 2015 will be a “pivotal year for the ASEAN market” because a new ASEAN Economic Community (AEC) is expected to come to fruition in 2015.

Although discussions among ASEAN members in preparation for the AEC are still ongoing, the successful initiation of the AEC is an exciting piece of news for the market.

10 Attractive Locations For Investors Under A Single Market

All ten ASEAN members are attractive to investors because of their favourable demographic profiles, sustainable supply of natural resources, cheap labour and other factors.

When they combine into a single market, they make up a population in excess of 600 million. Furthermore, they possess diverse economic attributes that are attractive to international businesses, ranging from financial, trading and technological skills in Singapore and cheap labour and natural resources in Myanmar.

More Than The Sum Of Their Parts

When the AEC materialises, it will represent an opportunity to facilitate and connect economies across the borders. Businesses would have a wider exposure to a wide range of consumer demographics. All of which would well represent far more than the sum of their parts.

Mark Mobius also pointed out that the possible location of the proposed AEC will be in the region of India and China, both having strong emerging markets. As such, this would be of great advantage for businesses and investors in ASEAN countries.

AEC To Drive Internal Growth Within ASEAN

ASEAN economies are also expected to increase domestic consumption of a wide range of goods and services.

The population in the ASEAN region has been growing over the last 15 years to 620 million in 2014. It is expected that the population will continue to increase to about 670 million by 2020, which would indicate a 30 percent growth since 2000.

Furthermore, the increasing per capita incomes and young population could possibly boost consumer demand in the ASEAN region. This is considering that the AEC would bring about policies that will support businesses with lower labour costs, ease of capital movements and taxations streamlining.

Look For Undervalued Companies In ASEAN

Stocks in many emerging markets are currently undervalued based on its price-earnings and price-book values. Mark Mobius believes that there are still funds looking to make investments in these undervalued firms as central banks globally continue to expand their balance sheets.

With major financial markets such as US and Europe having sky high valuations, the ASEAN market is a good hunting ground for undervalued stocks.

Additionally, keep a lookout for Initial Public Offerings (IPOs). The emerging markets for IPOs and secondary issues have been healthy with more than 30 percent of all IPOs globally being listed in emerging markets over the past ten years.

Si Jie is no stranger to investing having started his journey at a young age. He is heavily influenced by acclaimed investors such as Benjamin Graham, Peter Lynch, and John Rothchild.

Please click here for more information about this author.

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