Barings Eyes ASEAN Markets

Wendy Spires

12 February 2013

Savvy investors should have an eye on the ASEAN countries, and in particular Thailand, Indonesia and the Philippines in light of their strong continued growth, saysBaring Asset Management.

In outlining the growth prospects for the ASEAN countries, Barings points to the infrastructure spending story which has become important to the region as a whole in recent years. The firm believes that growing infrastructure investment, and the growth stimulus this represents, make Indonesia, Philippines, Malaysia and Thailand interesting to investors. The firm notes, for example, that Thailand has earmarked $85 billion for infrastructure projects, including the development of new high-speed railways.

Barings’ view on the ASEAN markets is also supported by the region’s burgeoning middle class and their increased discretionary spending power; the number of affluent middle class individuals in the region is expected to top 160 million by 2015 – a figure which represents over a quarter of the overall population.

“Healthcare, tourism, and retail are all sectors which, we believe, are in a prime position to benefit from enhanced spending from an expanding middle class with relatively little in the way of borrowings,” said SooHai Lim, investment manager of the Baring ASEAN Frontiers Fund.

“Property is another strong theme we favour as we journey through the first few months of 2013, especially as we’re seeing rising home ownership because of falling interest rates across a number of markets. In this regard, we like real estate developers such as Jakarta-based Ciputra Development.”

The firm also singles out agriculture’s prospects, particularly given the ASEAN countries’ strong share of soft commodity exports like rice, palm oil and rubber. Barings predicts that Thai, Malay and Indonesian producers are set to benefit over the medium to long term from growing commodities demand and an elevated price environment.

Investors will note that the ASEAN markets have already performed strongly over the past five years, but Barings believes the region still has the potential for further steady outperformance, not least because of its strong and large domestic demand - this creates momentum and the potential for a greater resilience against external economic shocks, the firm said.