The small cap stocks of Southeast Asia are getting lucrative enough to lure big investors such as Samsung Asset Management Co and Aberdeen Asset Management Plc. Despite the economic slowdown experienced by two of the most prominent economies in the region, the region’s economy, on a whole, has shown signs of growth.
As stated by the economist of Samsung Asset Management, Alan Richardson, the small caps are getting advantage because of the domestic demand and in addition, the earnings are also kind of insulated from the global macroeconomic forces. Incidentally, Southeast Asia’s growth forecast was raised in 2012 by The Asian Development Bank. This is the only area which according to the lender’s prediction is going to have a surge.
The MSCI Southeast Asia Small Cap Index, also known as MXSOSC, has seen a jump of 25% this year and that’s better than MSCI Southeast Asia Index’s advancement of 18%. The index’s growth is also better than MSCI Asia Pacific Index’s gain of 12%.
The investment officer for Nikko Asset Management, Ng Soo Nam stated that investors are finding small caps to be more attractive because of the sustained rally in the big caps. He added that provided the global environment stabilizes next year, a very strong market performance can be expected. On a whole, countries such as Thailand, Laos and Philippines have performed the best in stock markets. These countries were followed by Pakistan.
However, Northeast Asian stocks will not be left much behind in 2013, as predicted by Michael Kurtz, the Global Head of Equity Strategy for Nomura Holding Inc. According to Michael, Southeast Asia’s gains are more or less dependent of China’s economic growth as most of these countries’ exports depend on China. However, as stronger investment and private consumption is expected to happen in these countries, the dependency on China may get reduced to some extent over the next 5 years.
According to current estimates, this region’s economy will grow by 5.3% in 2012, better than earlier predicted 5.2%. Many of the Southeast Asian countries have already decided to loosen the monetary and fiscal policies. Therefore, the growth is expected to increase in a bigger and better way. According to a recent report released by Capgemini SA and RBC Wealth Management, the overall wealth of this region is also on an increasing note.