Asian companies still have ability to outperform over the long term

Global equities soared over the second quarter. Although the gains were broad-based around the world, emerging markets, and in particular Asia, outperformed developed markets as investors realised that their fundamentals remained strong throughout the recent economic turmoil.

While the valuation opportunity is certainly not as compelling as it was at the height of the turbulence back in October, we believe Asian equities remain an attractive investment opportunity for the long term. The MSCI AC Asia ex-Japan Index was up 34.98% in US dollar terms over the second quarter, outperforming the MSCI World Index. While equities cooled considerably in June, the MSCI AC Asia ex-Japan Index had gained 69.8% from its 27 October 2008 lows to the end of second quarter. Interest rate cuts, loan growth in China, and a rising appetite for risk by investors helped to fuel ...