ING sees Hong Kong, Singapore as safest Asia bets
HONG KONG (Reuters) - Investors in Asia should favour Hong Kong and Singapore shares over higher-growth India and China, given negative news slamming global markets, a senior ING Groep (ING.AS: Quote, Profile, Research) fund executive said on Tuesday.
Investors should also be overweight more defensive utilities, REITs and telecom firms, while limiting exposure to financial stocks outside of Hong Kong and often cyclical industrial and materials shares, added Nicholas Toovey, regional head of equity for ING Investment Management Asia Pacific.
Toovey, who overseas the investment teams operating in the firm’s 13 Asia-Pacific markets, said the group was keeping its portfolios in defensive mode until it saw indications of improvement in the global economic outlook. It managed $117 billion in assets in the region at the end of March.
“The negative news is there for fundamental reasons and these things need to play through, and that’s what we believe is happening as we speak,” he told Reuters in an interview.
“One important global signal would be an increase in activity in the U.S. housing market … and a bottoming of house prices in the U.S.”
Asian stocks as measured by MSCI pan-Asia equity index .MIAS00000PUS dropped 2.2 percent to the lowest since August 2006 on Tuesday, amid investor concerns about the region’s high inflation rate, a stricter lending environment and massive volatility from overseas markets.
The New Zealand-born Toovey said given the turmoil, the fund manager was favouring more developed markets such as Hong Kong.
“We can find a number of defensive investments here, including utility companies … and REITs (real estate investment trusts). The banking sector in Hong Kong is in relatively good shape compared with financial sectors in other places,” he said.
“Singapore is also a market where we can find more defensive stocks.”
He declined to disclose current holdings. But top 10 investments in its ING (L) Invest New Asia LU0051129079.LUF fund at the end of June included Hong Kong’s Link 0823.HK REIT, power utility CLP Holdings Ltd (0002.HK: Quote, Profile, Research), Cheung Kong Holdings Ltd (0001.HK: Quote, Profile, Research) and Hutchison Whampoa Ltd (0013.HK: Quote, Profile, Research).
The fund has returned 184.30 percent in the five years to June 30, beating a 183.39 percent gain in the MSCI AC Asia ex Japan index .MIASJ0000PUS, according to data from Lipper LIPPER, a Thomson Reuters company. It also beat the 162.96 percent return by its peer group as defined by Lipper. Toovey said ING’s fund managers were concerned Chinese companies, many of which have grown accustomed to high growth rates, could come under pressure as the economy slows there. China’s high inflation rate was also a worry, he said.
Inflation is a problem for India as well, which has the added negative of running both budget and current account deficits, he said.
The Hong Kong-based executive spoke after ING released results of a survey that showed its pan-Asia investor sentiment index fell to its lowest level since
