With equities markets around the world now exiting a significant market correction, there is plenty of opportunity for investors, particularly in Asian markets, says Mr Evan Erlanson, chief investment officer at Asian equities manager Seres Asset Management.
“There has been a great deal of speculation about China relaxing its tightening measures which has generated a lot of volatility in China and in Asian markets as a whole. But we are starting to see a gradual decline in volatility and over the course of the next few weeks markets will start to move out of the correction and into earnings season which will create buying opportunities for investors.
“Asian market valuations now reflect lowered expectations, implying significant upside in the short-term. Other potentially bullish signals include an oversold Euro, overbought Yen, China A-Share underperformance, heightened volatility levels, and a generally bearish consensus bias on earnings and global macro trends.
“The weak markets across Asia during June were largely caused by fears of a global ‘double-dip’ recession, while specific, one-off events also affected particular companies, causing disproportionately sharp sell-offs, in many cases driven by foreign investors.
“We now see a high probability of a corrective rally in markets and sectors that are particularly sensitive to shifting sentiment on global demand.
“During the reporting season, there will probably be a neutral response to positive results, while negative results will be treated harshly by investors. Overall, however, the outcome of earnings season in the US should help Asian markets, including China, start to move into a more sustainable market recovery,” Mr Erlanson said.
Seres believes there is potential for strong short-term performance in China, Taiwan, Japan, and in export-oriented sectors in general.
“We are now looking for good buying opportunities in growth positions while also preparing for potential short term upside surprises in beaten down thematic names. We view Chinese consumer and Internet names as interesting secular themes and are accumulating positions opportunistically.
“We also like Thai banks, where we see potential for multi-year expansion driven by a strong corporate investment cycle,” Mr Erlanson said.
Seres Asset Management is a boutique fund manager specialising in Asian equities, formed through a joint venture with Australian Unity Investments (AUI).
Seres is based and registered in Hong Kong.
Seres adopts an active, benchmark-unaware approach in Asian equities in order to achieve investment returns and performance regardless of the market cycle.
It takes a bottom-up stock selection approach, which is overlaid with macro-economic views to determine country and sector allocations. Seres is relatively unconstrained in regard to country and sector allocation, with stock-picking managed in line with a high conviction approach.
Seres and AUI intend to launch a retail product for Australian investors before the end of the year.
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For further information please contact:
Evan Erlanson
Phone: +852 3656 3366
Email: evan.erlanson@seresam.com
Disclaimer: This material has been prepared for general information and does not constitute a recommendation or financial advice and is not to be relied on as such. The information does not take into account the objectives or circumstances of any individual and we recommend consultation with a qualified adviser prior to making investment decisions. No warranty is given as to the accuracy, reliability or completeness of the information and no liability is accepted whatsoever for any error or omission in this material resulting in loss or damage of any kind suffered from reliance on this material.
