Barings’ SooHai Lim has increased his weighting to Indonesia believing the country’s strong growth since becoming a democracy is set to continue.
Lim, who manages the $166m (£144m) Association of South-East Asian Nations (Asean) Frontiers fund, says Indonesia has vast scope for growth.
The country, which emerged from 30 years of dictatorship in 2004, has a population of about 230 million and GDP per capita of $2,800.
Lim says while the country was the worst performer in the aftermath of the Asian financial crisis in 1998, it was the best performer following the global financial crisis 10 years later, with the MSCI Indonesia index up over 100%.
His conviction in the country has led Lim to build up a 22.2% weighting to it in the fund, representing a 4.1% overweight against the MSCI South East Total Net Return benchmark.
“Indonesia managed to grow 4.5% last year and will continue to be one of the better performing markets,” he adds.
“It did not just restructure its economy after the crisis, it also became more stable politically, and with the re-election of the president, reforms will continue.
“It is also enjoying the secular rise of commodities as a huge exporter of coal, crude palm oil and tin. With the huge rise of emerging economies, demand in these materials should increase, and this will benefit Indonesia further.”
Barings is also bullish on Chinese equities, and William Fong, the manager of the Barings China Growth fund, believes the country offers compelling valuations.
Fong, who runs the £22m fund together the $108.7m Dublin-domiciled China Select fund, has increased his exposure to consumer stocks on the back of policy support and increasing wages in both urban and rural areas.
The consumer discretionary sector makes up 14.2% of the fund, representing a 9.5% overweight against the MSCI China benchmark.
He also believes restocking activity in the US will drive export growth through the rest of the year, with technology companies benefitting from the expected PC replacement cycle. IT stocks now make up 10.1% of the funds – a 3.8% overweight.
“We are very selective on technology stocks,” Fong says. “As cap-ex grows, companies will look to update their IT systems.
“There are also lots of products coming through in the next few years and specific items, such as the iPhone 4G, will benefit the sector. This is the angle we are looking at it from.”
