Asian economies in good shape for 2017
As president-elect Donald Trump heads for the White House, much talk has centred on his views on protectionism, especially in relation to the Asian economies. But as is so often the case with public figures, I don’t think the full scale, aggressive increases in import tariffs that Trump promised during his campaign will come to fruition. I believe the real focus will be on making trade deals, despite the fact that the Trans-Pacific Partnership agreement will likely be shelved.
Let’s not forget the domestic economies of Asia are in much better shape than they were even ten years ago. Although the exported-orientated economies of Asia, for example Taiwan and South Korea, may see some weakness in GDP, appetite for increased trade barriers amongst members of Congress is severely limited. I remain broadly sanguine on the outlook for Asian economies in 2017. Earnings revisions are steadily improving, while the stock market, still under-owned by investors, remains cheap relative to historic levels, in my view, trading at 1.5x price to book value. The fierce rotation that we have seen in recent weeks, away from bond proxy-type stocks to more pro-growth, pro-cyclical situations favours, and will continue to favour, in my view, our strategy’s overall positioning.