Asia Now – stock and bond 2021 investing outlook – 10 key points

  1. The Asia ex-Japan regional economy will grow by an estimated 8.6% y-o-y in 2021, and 6.0% y-o-y in 2022, according to the International Monetary Fund.
  2. Asia is also now leading in innovation with more patents filed in Asia.
  3. In general, Asian companies are fundamentally healthy, with low debt and rising cash balances, and Asia stock valuations are cheap compared to major asset classes.
  4. A number of themes, including shifting consumer patterns, increasing e-commerce, rising credit penetration, and digital transformation, will likely be secular growth drivers for the future.
  5. Asia small cap companies are under-researched and can give investors exposure to the many thematic trends playing out both in Asia and the world.
  6. Asia’s V-shaped economic recovery provides a strong backdrop for Asia high yield and investment grade credit, where yields currently look attractive.
  7. China’s bond market is growing rapidly and offers attractive yields and low correlation compared to most major global asset classes.
  8. ESG is important, so it has been part of our Asia teams’ investment processes for the past 10 years or so, certainly before it became as fashionable as it is now.
  9. Asian countries like Vietnam are growing rapidly, and it is possible to get exposure to the growth dynamic by investing in companies listed outside the country.
  10. The greater inefficiency with Asian markets and big trends playing out in the region create winners and losers, making it possible to generate active returns.

Asia now dominates the world not only in terms of population, but importantly also in terms of market and economic influence.

In 2021, the International Monetary Fund1 estimates that Asia will contribute 45% of global economic output, and this contribution is expected to increase going forward. Asian companies account for 40% of the Fortune 5002. Asia's retail market is already the largest in the world3.

But it's not just about the largest megatrends, but also how you as investors from across the globe can participate in them. And that's also what we explored with our panel of experts from UBS Asset Management,

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