Public Equities

ASEAN: Where Positive Demographics Meet Supportive Secular Trends

September 2020 – 8 min read
Recent market volatility has created what we view as an attractive opportunity in ASEAN equities—particularly to tap into selective structural growth stories at compelling valuations.

While ASEAN has not been immune to the widespread volatility triggered by the COVID-19 pandemic and geopolitical tensions, we believe the region remains resilient and is well-positioned for medium and longer-term growth given the supportive secular trends that have emerged over the last decade. Chief among them, many large multinational corporations have looked to diversify their manufacturing supply chains beyond China in recent years. The trade discussions between the U.S. and China have accelerated these efforts—with ASEAN’s large and competitive labor force and potentially strong consumer base looking increasingly attractive. 

To seize a share of this manufacturing renaissance, many ASEAN countries—particularly the so-called tiger cub economies like Indonesia—have been enacting structural reforms, such as corporate tax cuts and labor law reforms, to enhance economic competitiveness.

Infrastructure investment has also increased across the region, which is supportive of GDP growth and encouraging of foreign direct investment. These factors, in turn, could pave the way for additional growth drivers to flourish—such as tourism, particularly once travel patterns return to normal. 

Given the region’s favorable long-term growth outlook, equity markets in ASEAN have expanded notably over the last decade. Participation has increased, not only from international institutional investors, but also from a developing domestic investor base with rising wealth and growing institutional pools of capital. And while these markets—like many others—may very well face challenges in the coming months, we believe the compelling combination of supportive demographics and favorable secular trends creates a strong case for investing in the region’s equity markets over the medium to long term.

Want to read the full article?

View PDF

SooHai Lim, CFA

Head of Asia ex-China Equities

Any forecasts in this material are based upon Barings opinion of the market at the date of preparation and are subject to change without notice, dependent upon many factors. Any prediction, projection or forecast is not necessarily indicative of the future or likely performance. Investment involves risk. The value of any investments and any income generated may go down as well as up and is not guaranteed by Barings or any other person. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

Any investment results, portfolio compositions and or examples set forth in this material are provided for illustrative purposes only and are not indicative of any future investment results, future portfolio composition or investments. The composition, size of, and risks associated with an investment may differ substantially from any examples set forth in this material No representation is made that an investment will be profitable or will not incur losses. Where appropriate, changes in the currency exchange rates may affect the value of investments. Prospective investors should read the offering documents, if applicable, for the details and specific risk factors of any Fund/Strategy discussed in this material.

Barings is the brand name for the worldwide asset management and associated businesses of Barings LLC and its global affiliates. Barings Securities LLC, Barings (U.K.) Limited, Barings Global Advisers Limited, Barings Australia Pty Ltd, Barings Japan Limited, Baring Asset Management Limited, Baring International Investment Limited, Baring Fund Managers Limited, Baring International Fund Managers (Ireland) Limited, Baring Asset Management (Asia) Limited, Baring SICE (Taiwan) Limited, Baring Asset Management Switzerland Sarl, and Baring Asset Management Korea Limited each are affiliated financial service companies owned by Barings LLC (each, individually, an “Affiliate”).

NO OFFER: The material is for informational purposes only and is not an offer or solicitation for the purchase or sale of any financial instrument or service in any jurisdiction. The material herein was prepared without any consideration of the investment objectives, financial situation or particular needs of anyone who may receive it. This material is not, and must not be treated as, investment advice, an investment recommendation, investment research, or a recommendation about the suitability or appropriateness of any security, commodity, investment, or particular investment strategy, and must not be construed as a projection or prediction.

Unless otherwise mentioned, the views contained in this material are those of Barings. These views are made in good faith in relation to the facts known at the time of preparation and are subject to change without notice. Individual portfolio management teams may hold different views than the views expressed herein and may make different investment decisions for different clients. Parts of this material may be based on information received from sources we believe to be reliable. Although every effort is taken to ensure that the information contained in this material is accurate, Barings makes no representation or warranty, express or implied, regarding the accuracy, completeness or adequacy of the information.

Any service, security, investment or product outlined in this material may not be suitable for a prospective investor or available in their jurisdiction. Copyright in this material is owned by Barings. Information in this material may be used for your own personal use, but may not be altered, reproduced or distributed without Barings’ consent.

Related Viewpoints