'Darkest before the dawn': Hard hit Asian consumer sector will rebound
"The bottom line is that this will pass"
Like the rest of the world, Asia's economy has suffered at the hands of the spread of Covid-19 this year.
China markets have held up relatively strongly, reflecting the country's status as first in first out, but other markets have not fared so well.
Year-to-date, India's Sensex has suffered a 23% hit, and South East Asia has fallen even further; the equity indices of Thailand, Indonesia and the Philippines are down 20%, 28% and 30% respectively.
All three indices may have already rebounded from their March lows, but the feeling that this is 'the end of the world as we know it' lingers.
We certainly don't think this is the case. In fact, we see the volatility markets are currently suffering as a wonderful opportunity to invest in those leading franchises with the strength and experience to emerge from this crisis even stronger.
Learning from the past
We have been investing in Asian markets for a long time. Not only have we have lived through SARS, MERS and swine flu, we have also battled through economic pandemics such as the Asian Financial Crisis and the Global Financial Crisis.
This has given us a great perspective and helped us, over time, to position the portfolio to capture how we expect consumer behaviour might evolve.
Consumer spending, supply chain logistics and China's lockdown
E-commerce, mobile gaming and social media, health and wellness, life insurance and leading private banks and mobile payments companies have long been stalwarts in our portfolio.
The infection rates right now are, no doubt, horrifying. Likewise, the unprecedented measures that governments around the world are being forced to introduce are contributing to rising fear and panic that is exponentially more infectious than the coronavirus.
However, the one thing we have learned is that it is always darkest before dawn. The basic facts that we understand lead us to believe that in six months to a year, we will look back on this horrific period with a sense of relief and wonder.
Most importantly, we will have some perspective. This is very difficult to attain right now when we are all caught up in the midst of it.
However, the world is not ending. The financial system is not about to collapse. In Asia, we are not blowing off steam from ludicrous and unsustainable valuations. The bottom line is that this will pass.
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