Mark Dampier: Rough patch could be coming to an end for powerhouse Asia Pacific

The Analyst

Asian and emerging markets have hit the headlines recently in a way that many investors won't be used to. Currencies and stock markets have been falling. The Indonesian rupiah, Brazilian real, Indian rupee and South African rand have all fallen quite markedly against the dollar this year. At the time of writing the Indonesian stock market has fallen almost 10 per cent over just two days.

One thing these countries have in common is large budget deficits, essentially meaning they rely on foreign money to fund themselves. This hasn't been a problem in the past few years as cheap money from the US Federal Reserve's quantitative easing (QE) programme has helped sustain them. But now talk of tapering, or reducing, the rate of QE has led to foreign money leaving these "hot" markets.

It is never pleasant to see the value of an investment fall, particularly one that has done well in recent years. Asian markets emerged from a huge financial crisis in the late 1990s and have since become the darling of many investors' portfolios. One has only to look at the investment trust sector a few months ago, when many Asia-focused funds were trading on a premium, to gauge the extent of their popularity. In the world of open-ended funds, First State and Aberdeen have been trying to slow the tide of money flowing into their Asian and emerging market funds by raising initial charges. I recently caught up with Hugh Young, manager of the Aberdeen Asia Pacific Fund, via telephone from Singapore to get a view on what is happening on the ground.

Mr Young is a consummate professional, immensely experienced, and has seen just about everything this area can throw at you. I found him remarkably relaxed, neither particularly bearish nor bullish, although it should be noted that he only considers the prospect for individual companies, rather than the stock market or economy as a whole. Mr Young believes it is near impossible to forecast what will happen from an economic point of view and the effect this could have on companies. He would rather concentrate on the companies and whether they can weather the bad times that inevitably come along during the business cycle.

That said, he understands that the area has been hurt by the unintended consequences of quantitative easing. He also cites recent downgrades to company earnings forecasts as a factor in recent stock market falls. Indeed, emerging markets have underperformed their developed counterparts over the past two years. However, Mr Young points out that the balance sheets of both large and smaller companies are in better shape in the East than the West. Asian companies have always been better prepared for a worsening economy, he says.

Recently, he has been building exposure to mining and materials companies, investing in underperformers such as Rio Tinto and BHP Billiton. He feels that management at these companies are at last getting back to basics and focusing on shareholders, rather than splurging money on expensive acquisitions.

In Asia he has been topping up two Singaporean banks which have particularly strong balance sheets. For exposure to India he is happy to hold a position of about 10 per cent, partly in the Aberdeen Global Indian Equity Fund. He does despair of Indian politics, which has been holding the country back for many years, but he is happy with the underlying companies in the fund. As for China, he would be prepared to increase exposure if corporate governance were better.

Mr Young is a long-term investor seeking out high quality companies capable of surviving through thick and thin. Portfolio turnover tends to be low and many companies have been held for more than 10 years in Aberdeen's range of Asian funds. He is happy with all the underlying companies he holds, and he is a manager I would trust with my money for the long term.

I believe those investing regularly in Asian and emerging markets should continue to do so, but for those seeking to add a lump-sum investment there could be more downside yet, and a more opportune time to invest might present itself. The region is starting to look cheap, according to our analysis, but I would prefer it to look slightly cheaper before becoming more positive.

Mark Dampier is head of research at Hargreaves Lansdown, the asset manager, financial adviser and stockbroker. For more details about the funds included in this column, visit

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at

Ben Little, right, is a Labour supporter while Jonathan Rogers supports the Green Party
general election 2015
The 91st Hakone Ekiden Qualifier at Showa Kinen Park, Tokyo, 2014
Life and Style
Former helicopter pilot Major Tim Peake will become the first UK astronaut in space for over 20 years
food + drinkNothing but the best for British astronaut as chef Heston Blumenthal cooks up his rations
Kim Wilde began gardening in the 1990s when she moved to the countryside
peopleThe singer is leading an appeal for the charity Thrive, which uses the therapy of horticulture
Alexis Sanchez celebrates scoring a second for Arsenal against Reading
Life and Style
An easy-peel potato; Dave Hax has come up with an ingenious method in food preparation
voicesDave Hax's domestic tips are reminiscent of George Orwell's tea routine. The world might need revolution, but we like to sweat the small stuff, says DJ Taylor
Japan's population is projected to fall dramatically in the next 50 years (Wikimedia)
Life and Style
Buyers of secondhand cars are searching out shades last seen in cop show ‘The Sweeney’
motoringFlares and flounce are back on catwalks but a revival in ’70s car paintjobs was a stack-heeled step too far – until now
Finacial products from our partners
Property search
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

    Ashdown Group: IT Manager / Development Manager - NW London - £58k + 15% bonus

    £50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...

    Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

    £13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

    Ashdown Group: Training Programme Manager - City, London

    £40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...

    Day In a Page

    NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

    Who's monitoring the outsourced NHS services?

    A report finds that private firms are not being properly assessed for their quality of care
    Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

    Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

    The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
    How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

    How do Greeks feel about Syriza?

    Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
    From Iraq to Libya and Syria: The wars that come back to haunt us

    The wars that come back to haunt us

    David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
    Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

    Too busy to surf? Head to The Pool

    A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders
    Heston Blumenthal to cook up a spice odyssey for British astronaut manning the International Space Station

    UK's Major Tum to blast off on a spice odyssey

    Nothing but the best for British astronaut as chef Heston Blumenthal cooks up his rations
    John Harrison's 'longitude' clock sets new record - 300 years on

    ‘Longitude’ clock sets new record - 300 years on

    Greenwich horologists celebrate as it keeps to within a second of real time over a 100-day test
    Fears in the US of being outgunned in the vital propaganda wars by Russia, China - and even Isis - have prompted a rethink on overseas broadcasters

    Let the propaganda wars begin - again

    'Accurate, objective, comprehensive': that was Voice of America's creed, but now its masters want it to promote US policy, reports Rupert Cornwell
    Why Japan's incredible long-distance runners will never win the London Marathon

    Japan's incredible long-distance runners

    Every year, Japanese long-distance runners post some of the world's fastest times – yet, come next weekend, not a single elite competitor from the country will be at the London Marathon
    Why does Tom Drury remain the greatest writer you've never heard of?

    Tom Drury: The quiet American

    His debut was considered one of the finest novels of the past 50 years, and he is every bit the equal of his contemporaries, Jonathan Franzen, Dave Eggers and David Foster Wallace
    You should judge a person by how they peel a potato

    You should judge a person by how they peel a potato

    Dave Hax's domestic tips are reminiscent of George Orwell's tea routine. The world might need revolution, but we like to sweat the small stuff, says DJ Taylor
    Beige is back: The drab car colours of the 1970s are proving popular again

    Beige to the future

    Flares and flounce are back on catwalks but a revival in ’70s car paintjobs was a stack-heeled step too far – until now
    Bill Granger recipes: Our chef's dishes highlight the delicate essence of fresh cheeses

    Bill Granger cooks with fresh cheeses

    More delicate on the palate, milder, fresh cheeses can also be kinder to the waistline
    Aston Villa vs Liverpool: 'This FA Cup run has been wonderful,' says veteran Shay Given

    Shay Given: 'This FA Cup run has been wonderful'

    The Villa keeper has been overlooked for a long time and has unhappy memories of the national stadium – but he is savouring his chance to play at Wembley
    Timeless drama of Championship race in league of its own - Michael Calvin

    Michael Calvin's Last Word

    Timeless drama of Championship race in league of its own