Page 17 - DIY Investor Magazine - Issue 28

‘WE REMAIN CONVINCED OF THE LONG-TERM CASE FOR ASIA’ In our view, they are right given distinctly “bubble-like” valuations in areas such as bio-technology and electric vehicle manufacturers. THINK DIFFERENTLY FROM THE CROWD In summary, we are working on the assumption of more measured progress for the region in 2021. Investors may have to work harder for positive returns as some of the long-term growth companies need to grow into their valuations. There are also pockets of value and we see opportunities in areas that have not captured the imagination of the Robinhood brigade. As ever we are prepared to be patient, think differently from the crowd, and focus on long-term sustainability. More information about the Schroder AsiaPacific Fund plc here > More information about the Schroder Oriental Income Fund Limited here > To buy these funds login to your EQi account Select Schroder AsiaPacific Fund Plc - GB0007918872 Select Schroder Oriental Income Fund Ltd - GB00B0CRWN59 Important information This communication is marketing material. The views and opinions contained herein are those of the named author(s) on this page, and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds. Past Performance is not a guide to future performance. The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested. Exchange rate changes may cause the value of any overseas investments to rise or fall. Any sectors, securities, regions or countries shown above are for illustrative purposes only and are not to be considered a recommendation to buy or sell. The forecasts included should not be relied upon, are not guaranteed and are provided only as at the date of issue. Our forecasts are based on our own assumptions which may change. Forecasts and assumptions may be affected by external economic or other factors. Issued by Schroder Unit Trusts Limited, 1 London Wall Place, London EC2Y 5AU. Registered Number 4191730 England. Authorised and regulated by the Financial Conduct Authority. A weak dollar has added to the fuel, as has a rise in thematic investing, driven in part by the fact that the pandemic has only served to further accelerate digitalisation trends already firmly in train. Asian stock markets have ample representation of companies that benefit: computer gaming, e-payments, e-commerce, electric vehicles, as well as the enablers of the new trends such as specialists in robotics, artificial intelligence, and semiconductor testing and production. A LONG-TERM CASE FOR ASIA The above perhaps is history. But to understand where we are going, it helps to understand where we have been. We remain convinced of the long-term case for Asia, and that is in the knowledge of the less good things that have intervened including continued tension between the US and China (a fact of life) and the many political fissures (Hong Kong, North Korea, Myanmar). The shorter-term outlook looks less enticing. Valuations are overall somewhat stretched, so the expected recovery in corporate earnings appears to be already well recognised by the consensus. And as we know, earnings very frequently disappoint. Furthermore, the very fact that Asia has had a “good war” over Covid means there is not the same degree of recovery potential as is possibly present elsewhere. We would also expect most regional monetary and fiscal authorities to continue a relatively conservative stance, led by China which has recently signalled some concern over exuberant markets. 17 DIY Investor Magazine | Apr 2021