The nation’s fund managers aim to overweight emerging markets this year as many recover some risk appetite from last year, but adopt a modest view on potential returns, a recent survey by Fidelity Worldwide Investment showed.
The annual survey lent support to growing popularity of emerging debts that attracted net capital inflow of US$2 billion last week, the highest since February last year.
Some 72 percent of Taiwanese fund managers threw their weight behind ASEAN markets in line with their fast-growing economic performance, followed by China at 64 percent and global emerging markets at 46 percent, the survey found.
Half of surveyed fund managers voiced plans to be slightly more aggressive this year, compared to last year, as the global economy improves and risks for European debts mitigate, the survey said.
The latest round of US quantitative easing and China’s peaceful political transition are also reasons for the confidence recovery, the survey said.
However, 20 percent of the respondents favor a more conservative investment strategy from last year due to lingering concerns over the US’ fiscal conditions and the fragile nature of economic improvement, the survey said, adding that whether China is out of the woods remains to be seen.
Global capital has upped stakes with emerging debts for 31 consecutive weeks, attracted by high yields and low defaults even though the room for capital gains is tapering off amid record high supply, JPMorgan Asset Management said.
Emerging economies, especially ASEAN members, are set to fare better in terms of GDP growth this year and less prone to fiscal debts that are plaguing developed economies, the survey said.
China has regained some popularity among investors after a lackluster showing last year, the survey said.
“China’s economy has stabilized from a year-long slowdown,” the survey said. “In fact, private investment is expanding in some areas while corporate lending is on the rise, signs that 2013 will be a better year.”
The upturn in risk appetite bodes well for equities that have taken a backseat in recent years, the survey said.
Steven Huang (黃軍儒), assistant vice president at HSBC Global Asset Management Taiwan, said debts and equities may grow simultaneously this year, because fixed-income products would remain popular amid the low interest rate environment, while equities are poised for a comeback due to cheap valuations and capital excess.
More than 30 percent of Taiwanese fund managers suggest investment tools with 5 percent to 10 percent interest yields or dividend incomes because they are less susceptible to market volatility, the survey said.