When it comes to betting on Asian equity markets this year, it seems all roads lead to the White House.

As regional markets continued to suffer the consequences of Donald Trump’s proposed steel and aluminum import tariffs, fund managers like BlackRock Inc.’s Helen Zhu and Janus Henderson Investors’ Wee May Ling expressed concern that trade tariffs could broaden to other sectors. That, in turn, could lead to a further deterioration in the U.S.-China trade relationship and impact stocks across Asia.

 “The main concern for us is the findings and potential actions from U.S.’ Section 301 probe into China’s intellectual property practices, which may result in more significant impact on both U.S. and China macro,” said Zhu, who heads the China equities team at BlockRock.

Here are some of the themes from our conversations with fund managers in Asia:

Tweets & Tariffs

Investors should watch out for “tweets from Mar-a-Lago,” said Kate Howitt, who manages the Australian opportunities fund at Fidelity, referring to Trump’s estate in Florida.

The trade tariffs “could be the start of more of a beggar-thy-neighbor policy, not good to have for global trade,” according to Wee, who co-manages Janus Henderson’s China strategy.

The New Norm

“As we have seen since the start of the year, markets are likely to remain volatile,” said Christina Woon, who is part of a team that manages an Asian equities fund at Aberdeen Standard Investments.

Investors have to navigate “expectations of rising interest rates, U.S. trade and tax policies, jitters over where the oil price is heading, and digesting all that alongside an assortment of macroeconomic data,” she said.

Opportunities Arise

The “consumer, financials and technology sectors offer particularly attractive opportunities,” said Joanna Kwok, whose Asia growth fund at JPMorgan Asset Management has returned over 40 percent in the last 12 months, beating 98 percent of its peers.

Caroline Maurer, who heads Greater China equities at BNP Paribas Asset Management, sees the pullback in early 2018 as a good entry point to buy high-conviction companies that benefit from long-term themes such as technology, investors move toward more premium consumption and mature industry consolidation.

Regional Underdogs

Kenglin Tan, a senior portfolio manager for Manulife Asset Management expects the equity market to perform better than 2017.

Asia is still seeing positive earnings growth and valuations are reasonable, she said, adding that “Indonesia’s recovery and growth are most underappreciated by the market.”

Where’s the Beach?

What’s there to look forward to? Whether it’s tackling white water rapids of the grand canyon for Howitt or spending time with family and friends for Maurer, most are anticipating a holiday as the volatile first-quarter heads to a close.

“Easter is always a good time of the year,” Aberdeen’s Woon said.

Source:
courtesy of BLOOMBERG

by Livia Yap

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