Stay constructive on Asia ex-Japan equities


Seek winners among Asian technology firms
Chief Investment Office30 Jul 2019
Photo credit: AFP Photo


Declining policy rates worldwide. The past two months have seen central banks in Asia scramble to cut rates, similar to their counterparts in Europe and Australia. Since the start of 2019, central banks in India, Malaysia, the Philippines, South Korea, Australia, New Zealand, South Africa, and Russia have all reduced their respective policy rates, and there are no signs of stopping.

In this environment of declining policy rates, we believe equities will emerge as winners.

The concerted effort of monetary easing could well enhance the attractiveness of equities, especially when we consider earnings yields against the backdrop of falling rates. For example, Asia ex-Japan (AxJ) equities currently offer earnings yield of 7.2%, c.5% above the US Treasury 10-year yield of 2%. The attractive yield gap will remain a favourable factor for AxJ equities.



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