'Growing market share for China's Xiaomi'
The company benefits from the strong penetration of electric vehicles in China and the global smartphone segment
3' min read
Key points
3' min read
Positive outlook on the Asian region as a whole, good prospects for China in particular, while among sectors technology will still dominate. Here is a summary of the thoughts of Andrew Swan, head of Asia equities at Man Group
How do you assess the Asian market compared to Europe and the US and what are the prospects for the coming months?
A prolonged period of outperformance has led to a significant valuation gap between the US and the rest of the world, which creates an opportunity for investors to diversify their equity exposure to other markets. In this context, the Asian market looks attractive as the region is able to benefit from three key structural factors, namely a more accommodative monetary policy, further stimulus in China and the new technology product cycle.
Do you think the economic stimulus measures carried out by Beijing are sufficient or should we expect more in the future, also in light of the repercussions of the tightening of US tariffs?
The market's initial assumption after Trump's victory is that the expected protectionist and pro-growth policy in the US will fuel higher inflation and, consequently, a shorter Fed cut cycle and a stronger dollar. A stronger dollar puts pressure on officials in Beijing to follow through on announced actions. The implications of Trump's policies remain to be seen, but the prospect of higher inflation expectations means that China will have to draw on its government budget to a greater extent than expected.
Japan also approved a massive plan to support the economy. What is the position on the Japanese market?
As part of our approach, we do not focus on Japan, but our colleagues who invest in Japanese equities point out that valuations remain attractive. The market has been dominated by a small group of large-cap names, creating long-term contrarian opportunities in sectors such as real estate, autos and some more domestically oriented companies.
Within the Asian region, which countries are worth betting on right now? And which ones to avoid?
We started to see a turnaround in China's earnings performance at the aggregate level, with expectations of improved corporate profitability emerging in a more expansionary policy environment. This was reflected in a pick-up in service-related consumption and an increase in demand for household appliances following the launch of an appliance replacement programme earlier this year. Although the real estate sector remains under pressure, there are signs of an improvement in market activity. Together, these factors should support China's stock market fundamentals going forward.
