Time to invest, says Aberdeen Asset Management

KUALA LUMPUR: Amidst the market volatility and economic slowdown, Aberdeen Asset Management Asia Ltd, which is one of the external fund managers for the Employees Provident Fund (EPF), feels that it is time to invest in the stock market.Its director for business development Donald Amstad said the returns for risk taking now were high and investors should identify companies with sound balance sheet.“The key issue is for investors to identify companies that have sound management and balance sheet, as some would successfully ride out this difficult period,” he told reporters at a media briefing on the market outlook for 2009.
Elston (left) and Amstad at the media briefing on the Market Outlook for 2009 at Menara IMC, KL. Photo by Chu Juck SengAmstad said that last year was dreadful for risk assets, with equity and corporate bond prices collapsing and only government bonds ending the year in positive territory.“Certain corporate bonds are now attractively priced. While earnings generally are likely to decline and the level of defaults to rise, the indiscriminate selling by certain groups of investors in 2008 has led to some very interesting situations in securitised assets,” said Amstad.

Aberdeen strategist for Asia Peter Elston said investment opportunities could now be found selectively in global bond and equity markets. He said no one should be under any illusion about how savage debt-deflation may be and how inter-linked the global economy was.“But stock market correlation has become extreme, and we are of the view that selective stock prices in Asia have reached attractive levels once again,” he said. Elston also said it was essential to ignore indices when it came to stock selection.“Rather than fixating on indices that only tell you what has happened in the past, the focus should be on a company’s balance sheet strength, cash flows and management quality,” he said.Aberdeen Asset Management Sdn Bhd managing director Gerald Ambrose Johari Ali Abdullah said a company’s share price would reflect its value, and it was more important to look at a company than a sector.

On the outlook for Asian economies, Elston said there was much dependence on Western economies to boost demand.“The trick now for Asia going forward is to come up with domestic demand-driven consumption. Malaysia has been more resilient than others but there is now a slowdown in various sectors. Once the collapse is complete, there will be good opportunities for growth,” he said.He also said Asian economies were more fortunate compared to Western countries, as the latter were mired in structural problems in their financial systems that would take longer to normalise.

Aberdeen Asset Management Sdn Bhd assistant investment manager Abdul Jalil Abdul Rasheed said Prime Minister-designate Datuk Seri Najib Razak would likely make some policy changes that would influence the economy and investment climate.He said it would be interesting to see the possible changes that Najib might make in the cabinet line-up, as well as relaxations to rules pertaining to foreign investment here.

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