Profiting From Asia’s Normalization Era

By Gabriel Yap, executive chairman of Singaporean investment firm, GCP Global Pte Ltd.

I had always wondered what is it like to retire before 40 years old and enjoy the world? What is it like to smell the roses everyday and enjoy every sip of my cappuccino?

I summoned up the courage to do just that after enjoying the 2007 bull run and retired from the hectic world of stockbroking and investment banking in 2009 to travel the world and devote myself to philanthropy work.

At the start of my stockbroking and investment banking career, I rode the upward wave of "Asia’s rising" in the 1980s. I learned then that taking an Asian bull market by its horns and riding through it can bring huge fortune.

I also learned in 1989 and then again during the Asia Financial Crisis in 1998 that Asian markets, particularly those with weak current account deficits and high government debts and highly dependent on foreign funds, are especially vulnerable when the markets come to roost as foreign funds evaporate.

It has been more than 2 decades and I think that Asia has now entered into a great normalization era. This refers to a period of sustained macroeconomic growth, greater economic impact of the middle-class, and lower volatility of Asian markets.

These trends would affect second-derivative factors like more sustained corporate profit growth – albeit at lower than the go-go days of 20% to 40% rates – more sensible economic and fiscal policies, and better corporate governance. These would provide the backdrop to stronger performance for Asian equities over the next decade.

There are a few investment themes that will guide my core portfolio picks, riding on Asia’s normalization theme.

1, Market Mis-Perception

Heightened competition from the potential entry of a fourth mobile operator in Singapore recently sent Singtel share price into a tail-spin. It spun downwards from S$4.53 on Apr 15 to S$3.98 on Jun 2, or a drop of 12.1% in just over one month.

To me, it represented one of the best “buy on dips” chances so far this year.

 
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