An outlook for Asia in 2013

In our latest Investment Outlook report for the first quarter of 2013, we explained the reasons for our tactically overweight position in Asian equities.

A new briefing note from fund manager Stuart Parks, Head of Asian Equities at Invesco Perpetual, adds further weight to the reasons to consider this investment region.

He explains that, whilst Asian economies slowed down last year, there are many positives in the picture for 2013.

The rate of growth in China appears to be reaching a sustainable level and retail sales there are continuing to grow at double-digit rates, as a result of the emerging affluent consumer.

Parks points out there were signs that Chinese exports and infrastructure spending picked up towards the end of last year.

Looking at the valuation of Asian companies, he points to corporate earnings which are expected to grow by 10% in 2013, along with a 3% dividend yield.

Parks concludes by saying:

“There are lots of things wrong with the world and there is lots of uncertainty. Even within Asia, people just do not know what is going to happen in China, but I think that a lot of this uncertainty is already reflected in valuations.”

As well as the usual risks and potential downsides, we believe there are plenty of reasons for investors to be positive about Asian equities in 2013.

As part of a well diversified portfolio, an allocation to this region could help to drive returns and balance risk.

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