Asian equities attractive for long term investors
Asian equities represent an opportunity for long term investors to benefit from a dynamic of growing streams and a bigger potential increase in dividend income, according to a research paper by Maple-Brown Abbott.
The Asia ex-Japan region offered a combination of recovering earnings streams, strong balance sheets, growing free cash flow yields, modest prevailing dividend payout ratio and supportive valuations, the study found.
However, despite of the Asia ex-Japan region including China A-Shares having listed stocks with a market capitalisation greater than US$1 billion, it was still underrepresented by its weighting in the MSCI AC World Index.
Geoff Bazzan, head of maple-Brown Abbott’s Asia Pacific equities team on Asian equities and an author of the study, stressed that the importance of dividend income to total long-term returns could not be ignored and that in Asia, as well as anywhere else in the world, the long-term return from equities was evenly shared between income and capital growth.
“High yield strategies on their own are not necessarily a successful strategy, with the highest yielding sectors in Asia ex-Japan typically underperforming the broader market of that region over the long term with scant statistical evidence to support its relevance as a single factor strategy,” he said.
Also, according to him, Asia ex-Japan region would offer investors exposure to upside in dividend growth thanks to a recovering earnings trajectory and a willingness to accept an increasing payout profile.
“Strong balance sheets, an improving earnings outlook combined with a modest but growing ratio are important factors in providing increased confidence to boards across the region to enhance dividend returns to shareholders,” Bazzan concluded.
Maple-Brown has been managing Asia Pacific equities strategies since 2002 which includes:
- Asian Investment Trust
- Asia Pacific Trust
- Australia Plus Asia Trust
AUTHOR
Oksana Patron
Recommended for you
A hiring spree is expected in private markets with 90 per cent of firms expecting to maintain or increase their headcount over the next 12 months, according to Preqin.
Abrdn Investments has hired a new global chief executive as Rene Buehlmann steps down after less than two years, it also announced a new senior leadership structure.
Having received bids from Bell Financial Group and AxiCorp, trading platform Selfwealth has confirmed it has entered into a scheme implementation deed after both parties were invited to make a higher bid.
Clime Investment Management has faced shareholder backlash around “unsatisfactory” financial results and is enacting cost reductions to return the business to profitability by Q1 2025.
