Trump-led volatility sends Asian funds to find shelter
(Bloomberg) – Donald Trump’s punishing tariff salvos and frequent flip-flops are challenging Asian fund managers: how to avoid potential wipeouts in headline-driven markets.
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Targeting countries as diverse as Canada, Mexico and China, the US president’s announcement in his first three weeks of office has lashed out financial assets from the Treasury Department to oil and Bitcoin. They also chose to invest based on a long-term basis and ran the fools.
Asian investors are responding to volatility by seeking assets that provide relative protection from swollen global trade frictions. Among these are China’s “hidden gems” with a deepscake theme, high-yield stocks in Singapore and Australia, growing domestic markets, and bonds from the Indian government.
“The Trump 2.0 playbook was to succumb for higher volatility. That’s why investors should take less total risk than in 2024,” says Greater China’s multi-asset at Abrdn PLC in Hong Kong. said Ruiluo, head of investment solutions. “An endless loop of escalation, retaliation, negotiation and de-escalation creates a lot of noise and volatility, he said.
Here are some of the investments currently endorsed by money managers and analysts in Asia:
Deepseek Theme
One place to reduce Trump’s tariff headline exposure can be found in Chinese technology companies related to DeepSeek’s new artificial intelligence app.
Internet giants such as Alibaba Group Holding Ltd. are increasing their appeal by promoting their ability to build AI models of capabilities comparable to their Western rivals. The expected widespread adoption of AI in China has led software companies like Beijing Kingsoft Office Software Inc. and 360 Security Technology Inc. to jump almost 30% this year, becoming the top 10 performers in the CSI 300 index .
The gauge of China’s technology stock trading in Hong Kong entered the technology bull market on Friday behind Deepseek’s AI model. This has drawn bullish comments from analysts at companies such as Deutsche Bank AG and HSBC Holdings Plc.
Joanne Goh, a senior investment strategist at DBS Bank Ltd. in Singapore, said that while Chinese stocks have proven to be a difficult trade in recent years, there are “many hidden gems.” to China’s technical capabilities. ”
Dividend Stocks
Another area that is currently being leaned towards providing shelter from high volatility is companies with a track record of paying dividends. Gauges of such companies have returned 15% over the past year, defeating 12% profits from the wide range of baskets in the region.
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Singapore’s benchmark stock index generates 4.9% based on estimated dividends over the next 12 months, with Australia’s yield of 3.4%. They are compared to 2.5% of the broad MSCI Asia-Pacific Gauge.
Duhra said he appreciates China’s state-owned enterprises as it is likely to be supported by Beijing’s directive to guide businesses to increase shareholder returns.
Domestic giants
Money managers say another strategy to reduce tariff risk is to put money into relatively large domestic markets and correspondingly countries that rely on exports.
Both India and Indonesia have large internal markets, with their “growth trajectories not much relation to the decline and flow of international trade, potentially increasing resilience,” says Singapore’s strait investment. Manish Balgava, Chief Executive Officer of Management, said.
According to data released by the World Bank, India’s exports accounted for around 21.9% of gross domestic product in 2023, while Indonesia’s exports were 21.8%. These figures compare around 29.3% worldwide, and over 170% at trading hubs such as Singapore.
India offers “attractive opportunities” as the government prioritizes infrastructure development. This presents a buffer for external trade dynamics, says Bargava of Investment Investment.
Indian bonds
India also offers another asset class that promises protection from government bonds, which is protection from growing global trade disputes.
Murray Collis, chief investment officer for bonds at Manulife Investment Management in Singapore, said the country’s debt is attractive in the medium term.
At the same time, he said, the US is “a little likely to implement tariffs on India given India’s lower trade deficits compared to regional countries.”
According to data compiled by Bloomberg, Indian government bonds that are accessible to foreigners returned 6.8% last year, but 6.8% last year.
– Support from Chiranjivi Chakraborty, Joanne Wong, Abhishek Vishnoi and Catherine Bosley.
