Hugh Young, who oversees $50 billion as managing director of Aberdeen Asset Management Asia, is bullish on stocks for that continent.
"It’s time to dip one’s toes into [the Asian] markets," he tells the Financial Times.
But don’t expect your purchases to rise quickly, Young warns. "We expect further bad news on the economy and earnings front for the remainder of this year and possibly next year as well."
Companies in almost every sector throughout Asia face two major problems, he says. "First there’s declining demand from the West, primarily the U.S., but also Europe, as those countries face economic problems."
Second, "there are higher input costs. Those two factors are combining to squeeze earnings," Young says.
He isn’t the only bull on Asia. Investment guru Jim Rogers recently told CNBC that he has begun buying Chinese stocks again after their recent decline. He sees Taiwan and China as the top two stock markets in the world now.
Mark Mobius, managing director of Franklin Templeton’s emerging market funds, has recently sung the praises of Thai and Indian stocks.
Young, too, is bullish on India.
"It has fantastic companies," he says. "Corporate governance is particularly good in India. It has some really world-class companies. If you compare them with China, they come out substantially in advance."
He particularly likes technology stocks such as Infosys and the consulting firm Tata. Young also is bullish on Indian pharmaceutical companies including Glaxo SmithKline’s India-listed shares.
"Then there are the homegrown financial companies like HDFC and ICICI," Young says. "These businesses are in really good shape. Those are ones that on any price weakness, we dip our toes in and buy more."
As a value investor, Young finds the financial sector particularly attractive in Asia. "It’s been pulled down with the troubles faced by financials across the world," he notes.
"But when you look at the details of Asian financials, generically, they’re in a lot better shape. They haven’t made the lending and balance sheet mistakes that many of their Western counterparts have made."
Despite this out-performance, the share prices of Asian financial stocks have been hit hard, Young points out.
"Obviously they will face the same economic slowdown as other companies. But when you relate that to their share prices, there’s certainly value at the moment."
Young sees little reason for bullishness in Asia over the next six months. "But we try to look beyond that period," he says.
"We’re extremely bullish on the way companies that we invest in are run. The strength of balance sheets distinguishes Asia from many other parts of the world. With balance sheets so strong, Asia can weather pretty much any storm."
Bottom line: "There can be arguments made to buy the [Asian] market today," Young says.
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