Fidelity overweight on Asia stocks

By Crystal Hsu  /  Staff reporter

Fri, Sep 07, 2018 - Page 12

Fidelity International yesterday said it would be overweight in Asian equities and bonds for the rest of the year, because they have been undervalued following panic capital outflows from Asia.

Asian equities generate much higher returns than stocks elsewhere in the world, with prices spiking 122.5 percent for the past 20 years, while dividend returns soared 165.8 percent, Ariel Lee (李祐慈), a fund manager at Fidelity International Taiwan, told a media briefing in Taipei.

US shares rose 74.5 percent during the same period, while dividend returns gained 73.7 percent, Lee said.

Results from European and Japanese equities were less impressive, she added.

“The data lend support to our belief that global funds have injudiciously cut Asian equities and bonds, driven by uncertainties over trade disputes and widening interest spreads following rate hikes in the US,” Lee said.

The investment management services provider is sticking to this strategy unless global tariff rows escalate beyond control and central banks embark on drastic monetary-tightening, she said.

Fidelity International expects the US Federal Reserve to raise its policy rates this month and in December.

It recommends a portfolio featuring 50 percent of bonds, 35 percent of equities and 15 percent of alternative tools to buffer market volatility.

“The large bond position reflects a cautiously optimistic view about the economic scenes,” Fidelity International Taiwan head of investment Peiling Chang (張翠玲) said.

The global economy remains on a course of expansion, although the cycle is likely at its end stage, Chang said.

Fears about a global financial crisis, which tends to strike every 10 years, also help drive global funds to take shelter in the US dollar, gold holdings and greenback-denominated assets, Chang said.

Multi-asset funds have proved effective in weathering market volatility due to their better risk diversification operations, she said.

That explains why such funds have become popular among Taiwanese investors, accounting for 10 percent of total fund holdings as of June, up from 9 percent three months earlier, she added.