Despite the stand-off between North Korea and the United States, Asian equity markets have their place.
Many UK investors – maybe naturally but almost certainly wrongly – concentrate on our own market and worry about the timing of investments now with the FTSE 100 near all-time highs.
Of course, nobody can time markets and investors should have at least a medium term view, but diversifying and looking further afield with at least part of your portfolio would seem to make sense.
In May the International Monetary Fund reported on Asia-Pacific positives and negatives.
It stated: “The outlook for the region remains robust – the strongest in the world, in fact.
“The near-term outlook, however, is clouded with significant uncertainty, and risks, on balance, remain slanted to the downside.
“Medium-term growth faces secular headwinds, including from population aging and sluggish productivity. Macroeconomic policies should continue to support growth while boosting resilience, external rebalancing, and inclusiveness. The region needs structural reforms to address its demographic challenges and to boost productivity.”
A 50:50 picture.
Since when North Korea and geopolitical tensions have become ever more concerning.
The rogue state has fired another intercontinental missile over Japan, breaching every tenet of international law, and the war of words has worsened between Kim Jong-un and Donald Trump.
But then this is a problem for global markets not just Asia.
Russell Investments recent assessment was that the Asia-Pacific region remained resilient, with GDP growth of around five per cent likely.
It noted: “We expect the developing countries within the region to outperform through 2017, while the outlook for the developed countries is far more mixed. The three key threats to our outlook are a global slowdown, a follow-through on some of the protectionist trade threats coming out of the United States, and high levels of debt in a rising interest rate environment.”
Its conclusion was equally cautious.
It commented: “Overall, we are neutral on the Asia-Pacific region. The strong year-to-date performance in 2017 has made valuations less attractive and, in our view, pushed the region into overbought territory.”
Angus Coupland, portfolio manager of the CC Asia Alpha Fund, believes Asia is much misunderstood.
He said: “There are no valid grounds for considering Asia in the same asset class as markets such as South Africa, Russia and Brazil.
“Since the financial crisis, investors have struggled to view Asia clearly, instead referring to it only as a component of emerging markets, or believing that by holding multinational companies they would pick up at least part of any economic turnaround.
“Both approaches are flawed.”
He points to a vibrant and growing middle class.
And all this drove GDP growth of 6.7 per cent, 6.2 per cent, 6.7 per cent and 7.1 per cent in the Philippines, Vietnam, China and India respectively in 2016.
Looking back to past troubles, Mr Coupland noted: “There is much to admire in the hard road that many Asian economies took.
“They devalued their currencies and set about working towards exporting their nations back to prosperity. In doing so they significantly improved the skills of their workforce as they moved up the value-chain, and engendered the efficient, hard-working ethics that have driven successes in the last decade.”
Andrew Swan, head of Asian equities and portfolio manager of the BlackRock Asia and BlackRock Asia Special Situations funds, added: “We are still finding opportunities in China, we believe fears in India have been overplayed, and we are also positive on the Indonesian market.
“Selectivity is crucial though – at both a stock and country level.”
Asia is certainly worthy of consideration so long as it is within a portfolio of investments.