M&A Wave Could Lift Asian Markets In 2010
By Gordon Platt
Increased merger and acquisition activity is likely to be the next driver of growth in many Asian markets, says Jason Pidcock, investment leader, Asia-Pacific equities, for Newton, a London-based global asset management subsidiary of BNY Mellon. “With Asia in line with the 10-year average, markets could easily go higher, driving leveraged buyouts and cross-border trades, as we saw at the end of the mid- 1980s boom,” Pidcock says. “Many Asian companies should benefit over the longer term from the relative strength of their balance sheets, with corporate indebtedness lower in Asia than in the US and Europe,” he adds.
Charlotte Ryland, investment manager, global funds, at Newton notes, “We are currently undergoing a period of global realignment, whereby Western economies are in the midst of adjusting to lower growth, lower levels of leverage and significantly more regulatory oversight of the banking system.”
As a result of this realignment, the developing world continues to present longer-term investment opportunities, particularly those countries able to stimulate domestic demand, such as China, India and Brazil, Ryland says.
Commodities such as oil remain interesting, she adds, with potential price rises driven by new sources of demand and declining production. High-quality defensive stocks with stable cash flows, such as telecom and medical technology, and exposure to developing economies are among Newton’s key investment themes for 2010.