Asia: Looking beyond familiar territory

Listen to our Asia investment experts give their views on the outlook for Asia’s economies, as well as fixed income and equities markets.

Asia 11 Nov 2021 2 min read

Key takeaways

Asia is an incredibly dynamic region. GDP growth in Asia is strong compared to the US and Europe and we expect their economies to continue to grow and evolve.
Asian equities are priced at the lower end versus their own history, and much cheaper compared to the rest of the world. But we should be mindful that there has been significant divergence in equity performance between different countries. While China has sold off significantly over 2021, other Asian countries performed very well.
In our view, Asian credits offer a compelling risk-return profile, providing attractive yields with measured volatility and duration risk. It’s important to note that the bulk of Asian credit indices have low levels of interest rate sensitivity, being much shorter duration versus US and European indices.
As China’s GDP grows, its inclusion in fixed income indexes will also grow. Index-following investors will start to reduce their allocation to developed country bonds and increase their exposure to China. Investors need to position for this shift.