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Asset managers keep steady belief in Asian equities despite volatility

Asset management companies remain remarkably upbeat when it comes to the prospects of Asia ex-Japan equities. In defiance of the rollercoaster performance of recent months and the widespread conviction that Chinese equities are in a bubble which appears in the process of unraveling, they consider the risk of a serious market correction negligible.


Only one out of 14 companies responding to the survey expect Asia ex-Japan equities to

generate investors a loss of more than 5% in the next 12 months. Exactly half of the respondents, on the other hand, seem to count on further rate cuts to stimulate markets, believing returns of more than 5% are on the cards.  

Keeping calm

Asset managers’ expectations about the asset class have stayed remarkably stable over the past few months, though returns have fluctuated wildly. Much same the same goes for fund selectors, who seem not exactly sure what to hold of the asset class. While less optimistic than asset managers overall, the numbers of buyers and sellers have remained quite stable this year, with about half of fund selectors planning to keep their allocation unchanged and a third intending to increase their exposure.


Global emerging market equities, which have been affected by the slump in commodity prices and political problems in Brazil and Russia, are less popular. Those planning to increase exposure are approximately equal in numbers to those intending to sell. Asset managers are also less upbeat about prospects for global emerging market stocks, with flat returns over the year being the consensus view.

Emerging outflows

The relative popularity of Asian equities versus their global emerging counterparts is reflected in fund flows. Net flows for the asset class have been higher or less negative than flows for global EM equities since August last year, though neither of the two asset class have enjoyed huge popularity of late. Asia ex-Japan equities saw €757m of outflows in May, though much of that can be attributed to a Chinese equity sell-off.   

Click here to view the full results of the latest EIE fund manager sentiment survey.