Australia
China
India
Indonesia
Japan
Malaysia
Philippines
Singapore
South Korea
Taiwan
Thailand
Vietnam
Germany
Hong Kong
USA
Switzerland
Singapore
United Kingdom
Other / International
Asia has had a diversified response to macroeconomic hurdles in 2022, but the region has largely been an outperformer compared to global financial markets. Will Asia continue to shine in 2023? Here are some expert opinions on the Asia Outlook 2023.
Asia Economy
“Asia will emerge as a bright spot in what looks like another extremely volatile year ahead…. We see fewer risks in India and Indonesia, given their domestic orientation and favourable demographics. China should also benefit from a cyclical recovery, as it gradually reopens its economy from Q2-23 onwards. Asian exporters with exposure to Chinese demand should benefit from this process, led by commodity and energy exporters in Australia and Indonesia,” said Union Bancaire Privée, a Geneva-based private bank and wealth management firm.
However, as fears of a recession linger, the Economist Intelligence Unit says, “Several years of strong export growth in Asia will reverse in 2023, with the EU entering a recession and the US economy forecast to slow sharply. The outlook for domestic demand will also be challenging as interest-rate rises filter through local economies.”
Robert Carnell, Regional Head of Research, Asia-Pacific, ING, expects inflation in Asia to peak at the end of 2022. “While we’re unlikely to see any significant recovery in the region’s economies next year, currencies and risk assets should return to growth.”
Asia Equity
Equity moves in the region have been quite personified, with Asia registering the best November in nearly three decades.
“The risk of a global economic slowdown, higher rates, and higher inflation will present opportunities for stock pickers focused on quality growth at a reasonable valuation. North Asian markets (Korea, Taiwan, China, and Hong Kong) look very cheap given that they have declined some 20% to 30% in 2022,” as per Eastspring Investments.
“In a slowing global economy with many moving parts to contend with, the question on Asia equity investors’ minds is how and where to find diversification and long-term growth in an environment of instability and inflation. We believe patience pays off in the long run, and while the dark economic clouds are not lifting anytime soon for the global economy, there are always pockets of opportunity in Asia to uncover,” writes PineBridge Investments.
“The unique economic dynamics of the region, as well as the attractive valuations of Asia ex-Japan equities, can provide global investors with good opportunities for diversification in 2023,” says Mike Shiao, CIO, Asia ex-Japan, at Invesco.
“Investors in Asia ex‑Japan equities should be patient, as we believe many of the positive long‑term trends for Asia ex-Japan that we identified in our 2022 Asia outlook remain valid, including environmental protection, the green energy transition, industrial and infrastructure upgrading, import substitution, the rapidly developing internet ecosystem, and deeper regional integration,” as per T. Rowe Price.
Asia Bonds
Asian bonds market is showing signs of a comeback, as the US dollar retreats and pressure on emerging currencies eases.
“Within the Asian bonds segment, we see opportunities in high-quality fixed income as the absolute yields are at their most attractive levels in over a decade. Investors can lock in positive real returns by allocating capital to short-term investment grade securities backed by healthy issuers that are yielding above inflation,” advises Eastspring Investments.
“Asia investment grade, the biggest segment of the Asian bond market, is expected to see strong interest due to its reasonable yields and high credit quality. Concerns about Asia high yield may persist for some time, driven by extreme volatility and distress in China’s property sector. This, however, should not obscure opportunities in the broader Asia high yield market, especially since default rates remain relatively low,” as per PineBridge Investments.
“We believe there is room for Asia credit spreads to tighten in the early part of 2023 given global investors’ light positioning, as well as the potential for fresh capital and risk allocation to the asset class at the start of the year. This comes against the backdrop of some positive catalysts, including a potential slowdown in rate hikes by the Federal Reserve (Fed) and policy shifts by China in certain key areas including Covid-19, the property sector and internet platforms,” said Nikko Asset Management in their Asia Outlook.
