Fund managers avoid SE Asia
Fund managers avoid SE Asia
HONG KONG (Dow Jones): Southeast Asian markets have long
fallen off the radar screens of many fund managers, to the point
that even civil uprisings, kidnappings, the impeachment of a
president and the firing of a central bank governor in any of
these countries don't make a big difference in terms of fund
flows.
"We've seen so many things happen over the years that nothing
shocks us. To be frank, these are things we don't follow closely
anymore," said Peter Hames, a director at Aberdeen Asset
Management Asia Ltd. in Singapore.
Most fund managers have been avoiding Indonesia, Malaysia,
Thailand and the Philippines for over a year, with these markets
being assigned negative weightings in Dow Jones Newswires'
monthly fund poll all this time.
In the May poll, sentiment for these four markets sunk
further, reversing a generally improving - while still bearish -
trend for the previous three months.
In all four markets, political tensions were cited by fund
poll participants as the main deterrent. Those fund managers
noted, however, that a further drop in weightings for these
Southeast Asian markets won't necessarily lead to more fund
outflows.
It comes as no surprise therefore that Aberdeen's Hames has
"nothing to say" in reaction to the recent kidnapping of foreign
tourists from a beach resort in the Philippines and the firing of
outspoken Bank of Thailand governor Chatu Mongol Sonakul by Prime
Minister Thaksin Shinawatra.
Vincent Duhamel, principal and chief executive at State Street
Global Advisors Asia Ltd. likewise brushed aside the latest
development in Thailand, and the ongoing efforts to impeach
Indonesian President Abdurrahman Wahid.
"Politics and problems that may arise from it don't have too
much of an impact in inflows anymore," Duhamel said.
"Portfolio investments in countries like Thailand and
Indonesia are so small compared to the big picture, so fund
managers don't feel the need to follow these markets anymore,"
Duhamel added.
JF Asset Management's sentiment for Indonesia has dropped
further in May compared to last month. In its reply to Dow Jones
Newswires' April fund poll, the Hong Kong-based fund manager
said: "Our confidence in the judgment of President Wahid and his
ability to control the more unruly elements among his followers
has plunged to new depths."
In the May poll, JF Asset Management maintained its view of
Wahid, adding it "doesn't expect political problems in Indonesia
to bottom anytime soon."
Seng Wun Song, regional economist at G.K. Goh Research Private
Ltd., believes that domestic political developments in Southeast
Asia are only important to local retail investors. Even then, he
said, these local retail investors aren't influential enough to
sharply move markets.
"Fund flows to Southeast Asian stock markets have been
miniscule compared to overall investments, so the threat of
foreigners pulling out and devastating these markets is no longer
there," said Song.
But there are a few who haven't dismissed these Southeast
Asian markets, and in fact see this as the best time to buy.
Mark Mobius, president of Templeton Emerging Markets Fund
Inc., is one among the minority that remains significantly
invested in Thailand, Indonesia, and the Philippines.
Mobius believes value-stock picking in emerging markets in
Asia will prove profitable within the next two-to-three years,
with Thailand likely to post the sharpest gains because the
"market has fallen by so much in the past few years."