HONG KONG (Reuters) - Investing for income rather than expansion in Asia is expected to compensate pidends for investors nursing wounds after a severe 2011 and staring during an capricious opinion subsequent year.
A concentration on pision payouts by Asian corporates, deliberate by many as a rather defensive strategy, runs discordant to a renouned idea that investing in a segment is all about chasing earnings-driven momentum.
But with economies opposite Asia slowing, forecasts for corporate increase being cut as headwinds from Europe insist and financier ardour for yields still growing, marketplace watchers contend a defensive position on equities competence be on a money.
"In Asia, not many people demeanour during pidends. But going forward, given of a rangebound market, pision produce will be a categorical lapse for a while," pronounced Li Cong, who helps conduct some-more than $5 billion as arch investment officer of Asia-Pacific during Mirae Asset Global Investments (HK).
In a pierce that suggests this could be a tellurian theme, Goldman Sachs on Tuesday struck a understanding to acquire a mutual account specializing in pidend-paying stocks, citing financier direct for income-generating strategies to means them in turbulent, no-growth markets.
With a acquisition, Goldman will now offer a initial pidend-growth batch fund, an denote of flourishing patron direct for reserve and income over risk.
DIVIDEND FUNDS SEE INFLOWS
This year in Asia, income managers such as JPMorgan Asset Management, UBS Global Asset Management and Invesco have launched pidend-focused supports in an try to lure investors into putting income to work in bonds that offer a relations reserve of a solid produce even in flighty markets.
And many existent pidend-oriented supports have seen net inflows. The $2.7 billion OkasanAM Asia Oceania Good Dividend Growth, a largest account in a space in Asia, saw estimated net inflows of about $520 million in 2011 adult to end-November, information from attention tracker Lipper showed.
The $1.9 billion Matthews Asia Dividend Fund and a $1.9 billion Newton Asian Income GBP Inc have perceived estimated net inflows of $216 million and $792 million, respectively, over a same period, a information showed.
Investors are already saying results. While a MSCI Asia-Pacific index was down 15.4 percent adult to November, a Matthews Asia Dividend Fund mislaid 9.5 percent and a Newton Asia Income Fund was down usually 3.7 percent. Mutual supports focused on a segment were down 16.4 percent.
'NOT SO SEXY BUT...'
Ivan Leung, arch investment strategist of J.P. Morgan Private Bank in Asia, pronounced a stream trend of investors peaceful to prerogative value some-more than expansion meant that high-pidend profitable companies demeanour attractive.
"Even if a marketplace refuses to ascent a PE multiples, we can usually lay there with high-growing pidend names and collect their stronger earnings growth and pidends, even if it's 2 or 2.5 percent some-more than other companies."
"It's not so voluptuous of course, though in a Warren Buffett-like 10-year investment period, that will compound," pronounced Leung.
To be sure, simply focusing on high pision yields is doubtful to be a best plan and checking on sustainability of those payouts as good as gain expansion to safeguard income flows sojourn healthy is crucial.
According to Thomson Reuters Starmine, 114 companies in a Asia-Pacific segment have pidend yields of 10 percent or more. But investors have to be responsive of "pidend traps," pronounced Nigel Tupper, conduct of Asia-Pacific equity plan during Bank of America Merrill Lynch in Hong Kong.
For example, Taiwanese hardware builder Acer Inc sports a pision produce of 10.5 percent though that is mostly given of a nearby 60 percent decrease in a cost of a shares this year as a attention opinion stays grim.
Shares of Hong Kong's R&F Properties produce 11.7 percent though with a skill marketplace in Hong Kong and China set to enter a severe patch a section competence not be a best one in that to find safety.
A shade of Asian bonds that are over a $1 billion in marketplace value, have pision yields of some-more than 5 percent and also have foresee gain for subsequent year that are aloft than three-quarters of their attention peers is a most smaller one, with usually 19 candidates.
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Real estate and financial companies from Australia and Singapore underline prominently in that list, suggesting investors competence wish to allot some income to a region's some-more grown markets that are seen as some-more stable.
Australia's Commonwealth Property Office, a listed trust that invests in blurb property, yields 5.7 percent and a unit's cost is adult 19 percent this year.
"Longer-term expansion in pidends has to be underpinned by long-term expansion in earnings," pronounced Jesper Madsen, lead manager of San Francisco-based Matthews Asia's informal pision portfolio, in an e-mail.
"When being a pidend-focused financier in Asian equities, it is not usually a matter of investing for high yields. Asia, as a region, offers investors a intensity for pision expansion alongside appealing yields," pronounced Madsen.
CASHED UP
Low debt levels and high income balances during Asian companies advise pision payouts are tolerable and could even grow in entrance years.
Companies in Asia-Pacific, on average, have a debt-to-equity ratio of usually 0.49, half that of their peers in a euro section and a third of peers in North America, according to Starmine.
At a same time, a negligence tellurian economy is expected to import on corporate earnings.
Over a past 3 months expectations for brazen 12-month gain for a MSCI Asia Pacific ex-Japan are down over 5 percent, on average, according to Thomson Reuters I/B/E/S.
Fears of supervision involvement and regulatory changes are also causing companies in Asia and Europe to refrain from spending notwithstanding softened change sheets given a tellurian financial crisis.
Matthew Sutherland, Fidelity Worldwide Investment's conduct of investigate for Asia-Pacific, told Reuters in an talk that companies in Asia ex-Japan were sitting on about $1 trillion in income and were prone some-more towards profitable pidends.
Fidelity analysts pronounced roughly 84 percent of companies they lonesome had possibly discharged M&A wholly to expostulate expansion or were usually deliberation it on a tiny scale.
(Editing by Muralikumar Anantharaman)
News referensi http://news.yahoo.com/analysis-dividends-fore-investment-theme-asia-054124192.html
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