Elizabeth Soon, head of Asia ex-Japan equities, and Huzaifa Husain, head of India equities, at PineBridge Investments, have just published their mid-year Asia equity outlook for 2024, outlining key themes to watch along with their asset allocation strategy.

Asia continues to offer compelling investment potential, benefiting from various opportunity sets across the region, according to Elizabeth Soon and Huzaifa Husain at PineBridge Investments.

With US-China trade tensions persisting and the economy slowing, Soon believes that many investors are choosing to ignore China even though some companies’ earnings have beaten market expectations.

“Indeed, signals in China remain mixed. The ratio of misses to beats in earnings has narrowed, and property market stabilisation measures are a positive indicator of the government’s support,” Soon said. She believes that the property easing package announced by the People’s Bank of China (PBOC) should improve demand and restore market confidence. These measures have somewhat eased systematic risk and aided the banking sector, which has broad exposure to property developers. Indeed, in 2024, the International Monetary Fund upgraded China’s growth forecast to 5 per cent from 4.6 per cent, after a strong first quarter, and to 4.5 per cent in 2025, attributable to additional policy measures.

Soon thinks that the divergence in valuations between China and the rest of Asia creates an attractive pool of investment opportunities. Despite the property market’s woes and concerns about weak consumption, Soon stressed that there are various alpha-generating opportunities in China. Amid the deflationary pressures in China and potential macro deterioration, the weaker signals show signs of bottoming and are coupled with the downward trend in earnings misses. “China is shifting from a manufacturer of low-end goods to [being] a high-end technology producer. Companies are also going global, which leads to the creation of multinational Chinese corporations,” Soon said.

She said that more fiscal and monetary measures are expected to help reflate the economy, focusing on manufacturing investment rather than consumption. As such, Soon believes that the more stable market environment and relatively cheaper valuations will improve equity investment potential.

Maggie Sun at Sumitomo Mitsui DS Asset Management (SMDAM) is also optimistic about China’s outlook, believing that Chinese equities are attractively valued. “The worst is now behind China, even if the property market might take longer than expected to recover significantly,” Sun said.

Sun highlighted that a number of Chinese firms have learnt from the 2018 US/China trade conflict when former US President Donald Trump set tariffs and other trade barriers on China. “They have moved their capacities to south-east Asia, Mexico and Europe, to avoid the high tariffs and to mitigate the impact,” Sun added. See more commentary here.

For the ASEAN markets, PineBridge believes that selectivity is key. Singapore continues to offer high dividend yields and defensiveness. In Indonesia, uncertainty on fiscal policy with the formation of the cabinet is likely to cause investors to stay on the sidelines. Thailand faces similar political uncertainty. Malaysia looks promising among the ASEAN countries and is relatively stable.

India
Husain emphasised how India remains one of the fastest-growing countries, led by advancements in digitalisation, rising consumption potential, and energy transition initiatives.

Even the unexpected election result of a coalition government is unlikely to shake investors for long. In fact, with such sound growth drivers, the distinction between pockets of the Indian market that are overvalued and those with strong fundamentals and growth prospects will become much clearer once the dust from the election has settled.

In India, an effective investment strategy stems from focusing on earnings rather than stock price momentum. While headline valuations might look expensive, Husain believes that the average hides a lot of granular opportunities available to a diligent, bottom-up stock picker. Other investment managers are also positive about India in 2024. HSBC Global Private Banking maintains its overweight positions in Japan, India and South Korea, where it sees the best opportunities for tapping into Asia’s structural growth themes. Björn Jesch, global chief investment officer at DWS, also believes that India will remain the growth champion in Asia. See more commentary here.