The latest Manulife Investor Sentiment Index (MISI) for equities across Asia has dropped eight points from January (40 points) to March 2018 (32 points), of which the sentiment of the equity asset class in Hong Kong has seen the biggest drop, 19 points.
According to Manulife Asset Management, which is the global asset management arm of Manulife Financial Corporation:
Volatile market conditions appeared in major stock markets during the period, partly in response to the threat of potential trade war as a result of the US’s proposed tariffs on Chinese imports and the retaliatory tariffs proposed by China. Sentiment in Hong Kong (from 32 to 13), Taiwan (from 12 to 0) and Thailand (from 48 to 33) were the markets that saw the biggest drops in their score.
While the drop in MISI for equities reflected investors’ concerns about the impact on the performance of stock markets, a global trade war is not its base case scenario. The situation is something that its investment team is closely monitoring. If trade tensions escalate, there are more ways that the technology sector could be impacted in the race for technological advancement. Its focus will be on domestic developments.
Mr Ronald Chan, chief investment officer, equities, Asia (ex-Japan), Manulife Asset Management, said, “In our view, the Asian economy is underpinned by sturdy regional fundamentals which is also shielded from the international trade conflicts. The region is home to a diverse mix of economics – from large to small and from export-based to domestically-driven economies. It also has robust regional earnings and ample liquidity.”
Asia is transitioning from operating in a post-Global Financial Crisis (GFC) economy to an environment within which normalized economic activity is the order of the day. The region is well positioned both structurally and cyclically in this new normalized economy. At times of uncertainty, focusing on bottom-up stock selection by identifying companies with solid fundamentals is key.
“While the markets have been focused on the potential impact from the trade conflict, we believe that the drivers of performance in Asia will be inward looking during this time of heightened uncertainty. Investors should focus on companies that can benefit from the strong domestic dynamics in the region. The positive impact of the regional domestic development at the micro level is already being felt, such as retail sales recovery as well as policy reform in the healthcare sector in China. ASEAN is also emerging as a key source of economic growth,” he added.
Manulife’s Investor Sentiment Index in Asia (MISI) is a proprietary survey measuring and tracking investors’ views across eight markets in the region on their attitudes towards key asset classes and issues related to personal financial planning.
The MISI is based on 3098 online interviews in Hong Kong, China, Taiwan, Singapore, Malaysia, Thailand, the Philippines, and Indonesia from 1 January to 31 March 2018. Respondents are middle class to affluent investors, aged 25 years and above who are the primary decision maker of financial matters in the household and currently have investment products.
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