At a conference recently, Fidelity Japan CIO John Ford and Fidelity south east Asia fund manager Allan Liu discussed the changes that have occurred since the Asian crisis of 1997.
Ford said Asia’s transformation since the crisis has been remarkable.
He said: “Today the economies of Asia are now the driving forces of both global growth and global confidence. It has taken a number of years for the turnaround to complete but the issues have now been sorted and new world-class companies have been formed.”
Liu added that many Asian companies now operate across the entire region, rather than just in their domestic market.
He said: “Intra-regional trade is a rising trend driving growth from a wider base than the traditional US-led demand. An increasing number of companies also operate outside their domestic country. Corporate transparency has improved and management is more focused on profit margins, cash flow and achieving the optimal capital structure rather than the ‘growth at any cost’ approach that contributed to the Asian crisis.
“Both GDP and corporate earnings growth in Asia today is financed by equity, capital markets are more open and there is more foreign participation. The Asia ex-Japan market has risen by more than 30 per cent in the first three quarters of this year so I believe we need to be cautious in the short term. However, the underlying themes driving growth are unchanged and long term the region is still a good investment.”