Global investment house, Franklin Templeton Institutional is recommending investors consider higher allocations into Asian equities based on what it claims are improvements in the region’s socio-economic climate.
A white paper released late last month by Franklin Templeton Global Equity Group claims that structural changes in the economics and cultures of the region, driven by strong population growth, demographics and the rise in democracy have led to a favourable investment climate in many Asian nations.
The white paper says that Asia ex-Japan currently compares favourably with the rest of the world on a price/earnings and price/book value basis while its return on equity currently ranks very highly.
Co-author of the report and senior vice president with Templeton Global Equities, Peter Wilmshurst said the valuation discount was even more appealing when considering the promising long-term growth expected in the region.
“There are a number of factors which should deliver sustainable long-term growth and future improvements in corporate profitability,” Wilmshurst said.
He said these factors included population growth, improvements in Government, growth in India and China, improving education and literacy levels, growth in demand for white collar jobs in countries like India and a rise in consumer spending.
“The big picture shows genuine growth opportunities in Asia at attractive valuations,” Wilmshurst said. “This by definition implies a stock-specific approach to investing.”
