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Future investment destination: Southeast Asia

12-29-2011 10:33 BJT

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As the eurozone crisis batters both developed economies and emerging markets, investors are looking for a new destination to put their money in. Some analysts say, one decent choice could be Southeast Asia.

Mounting chaos in the euro zone, stubbornly high unemployment in the U.S and trouble brewing in BRICs like India.

So where can investors find good value in 2012?

Look no further than Southeast Asia, say some experts.

They cite the arrival of big name multinationals such as Nissan and the emergence of consumers with cash to spend.

All of which is helping to maintain strong growth even as the global economy cools.

The pick of the bunch could be Indonesia.

It received a lift this month when Fitch elevated it back to investment grade -- a move warranted by the numbers, says Macquarie FX strategist Nizam Idris.

Nizam Idris, Macquarie head of EM FX Strategy said: "Inflation has fallen to around four and a half - five percent. That is really low relatively to historic averages. Growth has remained elevated at around six and a half percent. They could do better than that obviously but the fundamentals are very supportive of an upgrade for Indonesia."

A Reuters poll of economists sees ASEAN economies growing far faster than those of the US or the eurozone.

That may translate into good performance for southeast Asian equities and bonds in 2012, says Barclays Capital economist Rahul Bajoria.

Rahul Bajoria, regional economist with Barclays Capital said: "Philippines could possibly see some positive ratings action, but it’s not likely to have a very strong impact as of now. Our sense is that most of these fixed income markets should remain steady, but Indonesia is one contender which has some potential to outperform in the near term."

Such prospects haven’t been ignored by investors. Indonesia and Philippine stock indices outperformed the wider ASEAN market in 2011.

And take a look at relative borrowing costs. Both of the ASEAN countries command a lower yield than higher-rated European nations such as Italy and Spain.

Of course, there are challenges.

In Indonesia, many of the country’s roads are crumbling, the sea ports back-logged, and electricity patchy. Both countries are also struggling to bring corruption under control.

But for many, the future remains bright. Expectations for more ratings upgrades, solid growth and impressive demographics are raising hopes that Southeast Asian countries like Indonesia and the Philippines will finally live up to their promise.

 

 

Editor:Zhang Rui |Source: CNTV.CN

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