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Capital will keep flowing into Asia, says fund manager

CAPITAL will keep flowing into Asia despite the turbulence across global stock markets, according to a senior executive of an international fund manager.

Fidelity International’s global head of institutional investment, Mr Michael Gordon, said long-term investors remain positive on Asia’s prospects, as the region is not plagued by debt problems being witnessed elsewhere in the world.

Fidelity is a global investment management company with more than US$276 billion (S$390.3 billion) in its portfolio.

Mr Gordon expects Asian stocks to fare ‘a little better’ than global equities this year.

Global equities will end the year about where they are now, he predicts.

‘We are still clearly favouring Asia over the rest of the world,’ he told The Straits Times.

‘Capital will continue to flow to Asia. I don’t see that changing any time soon,’ he added.

‘The debt problems that are killing markets elsewhere are not present here. In Asia, debt has not driven things. The credit crunch is not biting here.’

Global equities endured a torrid time last month. About US$5.2 trillion were wiped off their value, as investors took cover in the face of economic uncertainties.

However, that has not dampened the positive sentiment among investors with a long-term view towards Asian markets.

‘There are no nerves about Asia. The longer-term investors remain as committed to their investments in Asia as they were last summer,’ Mr Gordon said.

On his outlook for global equities this year, he said: ‘The volatility will quiet down a little bit. From here, things will probably be flat from today.

‘I expect it to close down about 5 per cent to 10 per cent overall for the year.’

He also feels Asia will be ‘quite insulated’ in the event of an economic recession in the United States.

The region’s long-term financial health is thriving, with strong foreign exchange reserves and current account surpluses, he explained.

Asia is also no longer as dependent on US capital now as it was 10 years ago, he said.

Source: The Straits Times 19 Feb 08

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