As most of us worry about whether the UK is in severe recession we risk missing out on the opportunities in Asia (excl Japan) where consumers are not beset by debt, Governments have surpluses to spend and banks are not in meltdown – Asia and its consumers will become increasingly influential in years to come, with huge implications for Asian companies (and many global ones too).
Evidence is already building to support the case to buy Asian funds focussing on high yielding shares. Our concern was that the resolve of Asian companies had yet to be tested – well it has now. In 2009 earnings in Asia were expected to decline by 25%. For a bit more meat on the bones it is interesting to consider the Newton Asian Income fund, one of the very few funds that focuses on high yielding Asian shares. Of companies owned by the fund, 60% of those announcing payouts in the 1st quarter cut their payouts across most sectors. On the face of it this is a concern, but the reality is quite enlightening.
Last month we noted that 75% of UK companies announcing dividend payouts in the first quarter either held or increased their payouts (quite unexpected). Yet where cuts did take place they were often averaging 50% or more and were quite savage.
In contrast, in Asia our current impression is that a higher proportion of companies are cutting payouts, but in much smaller percentages. The Asian experience of trimming dividends in a downturn appears to be quite different to the UK
We feel Asian economies hold out considerable potential in the years ahead. This is already evidenced by the sharp outperformance of their indices vs the UK stock market year-to-date which we feel is the starkest indicator that not only are Asia’s problems less severe (or more easily solvable), but also that Asia will more easily attract the vast sums of global cash looking for a profitable home.
Moreover, on price to book value Asian shares look cheap. Combine this with the Asian trend towards dividends, and increasing dividend payouts and we feel now offers a good long term buying opportunity.
This article is not a recommendation as the fund might not be suitable for all investors. You should speak to your financial adviser before purchasing any investments as shares can fall as well as rise.
Evidence is already building to support the case to buy Asian funds focussing on high yielding shares. Our concern was that the resolve of Asian companies had yet to be tested – well it has now. In 2009 earnings in Asia were expected to decline by 25%. For a bit more meat on the bones it is interesting to consider the Newton Asian Income fund, one of the very few funds that focuses on high yielding Asian shares. Of companies owned by the fund, 60% of those announcing payouts in the 1st quarter cut their payouts across most sectors. On the face of it this is a concern, but the reality is quite enlightening.
Last month we noted that 75% of UK companies announcing dividend payouts in the first quarter either held or increased their payouts (quite unexpected). Yet where cuts did take place they were often averaging 50% or more and were quite savage.
In contrast, in Asia our current impression is that a higher proportion of companies are cutting payouts, but in much smaller percentages. The Asian experience of trimming dividends in a downturn appears to be quite different to the UK
We feel Asian economies hold out considerable potential in the years ahead. This is already evidenced by the sharp outperformance of their indices vs the UK stock market year-to-date which we feel is the starkest indicator that not only are Asia’s problems less severe (or more easily solvable), but also that Asia will more easily attract the vast sums of global cash looking for a profitable home.
Moreover, on price to book value Asian shares look cheap. Combine this with the Asian trend towards dividends, and increasing dividend payouts and we feel now offers a good long term buying opportunity.
This article is not a recommendation as the fund might not be suitable for all investors. You should speak to your financial adviser before purchasing any investments as shares can fall as well as rise.
To find out more about any of these stories or
Ward Goodman please contact 01202 875900
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