Examining recent price trends, India has stabilized in dramatic fashion following its dismal performance in 2013. With superior demographics, a skilled work force, and pro-business leadership, India could prove to be an excellent growth engine over the coming decade. However, investors should also bemindful of the higher than normal price volatility and look to hold any new investment with a long-term viewpoint.
Circling the globe and focusing in on to the Pacific Rim, Indonesia has had a stellar year following a major decline of over 20% in 2013. The Market Vectors Indonesia (IDX) is currently up 26.5%, yet appears to still have a lot of room to run to reach its all-time highs. This ETF is weighted primarily towards large and mid-cap financials, consumer staples, and consumer discretionary stocks.
Indonesia stands to build on excellent GDP growth rates that exceed 5% on a year over year basis. Two thirds of their economy is driven by domestic consumption, which could continue to perform well given their stable democracy and large middle class. Indonesia also boasts one of the lowest debt to GDP percentages in greater Asian region, which should allow the government to continue its key investments in infrastructure.
Finally, stocks in the Philippines are beginning to show signs of life, with a year to date return of 23.4%. The iShares MSCI Philipines (EPHE) is dominated by 42 large cap stocks primarily centered around the financial, industrial, and telecom sectors.
Although the Thai protests last year pushed the region into a state of disarray, the Philippines has managed to overcome those fears and has held up relatively well. The Filipino economy is poised to continue its 2014 run on the back of robust economic growth, increased tourism, and a strong fiscal balance sheet.
In addition, the Filipino peso has been very strong relative to the U.S. dollar and other emerging market currencies. As a result, GDP growth has exceeded 6.5% over the last two years. These two factors bolster EPHE’s chances of trending higher in the near-term, even despite the country’s moderate levels of wage inequality and foreign investment restrictions.
Three-month flows into Singapore exchange-traded funds (ETFs) are on course to reach the most since Markit Ltd began tracking the data in 2009. Investors took money out of the stock and bond funds for five straight quarters through June, the Markit data show. The benchmark Straits Times Index has rebounded 13 per cent from this year’s low on Feb 5 and Singapore’s sovereign debt returned 3 per cent this year.
Singapore shares are the most attractive among Asia ex-Japan and emerging-market equities, beating Hungary, Chile and China, according to a Morgan Stanley study using measures from earnings to corporate governance and technical indicators. The investment bank predicts companies in the South-east Asian city-state will beat consensus earnings forecasts after the economy expanded at a quicker-than-expected pace in the second quarter.
“The Singapore market is somewhat undervalued for a pretty strong growth environment with positive earnings revisions,” said Jonathan Garner, Hong Kong-based head of Asia and emerging-market strategy at Morgan Stanley. “We also like the fact that the market scores very highly in terms of our political risk and corporate governance model.” BT on Tuesday)