Lack of reform in China leading to caution on equity markets

Investors need to be very selective in Asia, not only at the company level but also by country and industry, given very divergent growth trends. However, a more gradual normalisation in US monetary policy, as indicated recently by the US Federal Reserve, gives Asian central banks more room for policy easing.

Although trend growth is slowing, current economic growth remains higher in Asia versus the western world, and more importantly, the potential for future growth remains far better in Asia. From a valuation perspective, the de-rating of Asian equity markets relative to developed markets has been protracted, and while earnings have been slowing, they have seen little distortion from leveraged share buybacks compared to earnings in certain developed markets. First State's Lau: I cannot remember the last time I was positive on China The Philippines has upcoming elections, and the right...