For 2013, Australian equities look vulnerable in the near term, but still appear attractive relative to fixed income. While we are more cautious than the consensus, we suggest investors maintain neutral allocations to risk assets and keep the ship “steady as she goes.”
While the dim sum bond market has grown rapidly and there are good reasons to expect it to provide investment opportunities in the future, we do not presently advocate a direct allocation to dim sum bonds given issues such as size, illiquidity, lack of transparency, and governance.
Although valuations are reasonable, macro risks remain substantial. For now, investors should be neutral and seek to build overweight positions on weakness.
We are neutral on Australian equities and bonds, but still a bit nervous about the Australian dollar. While Australia faces some homegrown challenges, most of the risks emanate from offshore. We see a balance of potential upside—and downside—risks that argue investors should hope for the best, but prepare for the worst and ultimately hang on…
We continue to be neutral on Japan despite low valuations, as the catalyst for outperformance remains elusive.
While the long-term case for Asia ex Japan remains compelling and equity valuations are still reasonable, in the near term we continue to see greater risks on the downside. We view Japanese equities as inexpensive and Australian equities as reasonably priced, albeit more expensive than developed markets equities as a whole.
Over the last six years the Chinese private equity market has grown and matured considerably. This paper reviews the private equity landscape in China, discusses the evolution of investment structures, and evaluates the case for private equity investing in China.
While Asian economies seem poised for faster economic growth than the developed world, these superior prospects are already incorporated into equity valuations, leaving Asian equities vulnerable to near-term disappointment.
This report examines the performance of Asian hedge funds in 2008, discusses issues to keep in mind when considering an investment in Asian hedge funds, and explores the role of such funds in a portfolio.
Japanese equities are again oversold, unloved, and undervalued to the point where in the past the market has managed to post subsequent relative outperformance. However, it may be some months before Japanese equities decisively outperform, given the headwinds of a strong yen and uncertainty surrounding economic policy and the strength of the global economic recovery.