ASIA-PACIFIC EQUITY
Three-year sector performance
SECTOR ANALYSIS
The Asia Pacific with Japan equity sector
slightly outperformed the Asia-Pacific equity
ex-Japan sector over the three-year period
ending March 2016, indicating the additional
exposure to Japanese equities helped
performance. Top performers in the sector
typically had a stronger focus on small/
mid caps and a bias toward certain growth
sectors such as consumer discretionary and
information technology, while maintaining an
underweight in financials. The weaker funds
were mainly those investing in the ASEAN
markets. The region’s major currencies were
negatively impacted by a strong US dollar
during the period.
MARKET REVIEW
Source: FE Analytics (31 Mar ’13 to 31 Mar ’16)
Three-year annualised return/volatility
Asia-Pacific equities underperformed global
equities over the three-year period mainly due
to the region’s concerns over China’s economic
transition. The US Federal Reserve’s tapering
measures triggered concerns over potential
capital outflows from the emerging Asia
economies and hence put downward pressure
on Asian currencies. Individual equity market
movements were also impacted by countryspecific factors, including the elections in India
and Indonesia that gave rise to optimism for
reforms, Thailand’s political turmoil and the
“three arrows” stimulus in Japan. In general,
Asia-Pacific equities followed an uptrend until
the second half of 2015, when concerns over
China’s economic slowdown intensified and
undid previous gains made before June.
MARKET OUTLOOK
After a period of underperformance,
valuations across Asia-Pacific equities now
currently trade at a significant discount
compared to more developed markets. Various
Asia-Pacific economies are undergoing a
series of reforms aimed at boosting growth
going forward. As China transitions to a
more balanced economy, consumption-led
factors should continue to be the key driver
of growth, though headwinds will prevail.
Provided by FE Advisory Asia as of 31 May ’16
Source: FE Analytics (31 Mar ’13 to 31 Mar ’16)
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