The mood seems to be quite upbeat for ASEAN capital markets and investing in South East Asian ETFs(a visible trend of the past year) will rise further in all likelihood. The region which will inhabit more than 300 million middle class families by 2015 is attracting a fair amount of foreign investments through institutionalised channels and interestingly through the broader options. Foreign Investors including Americans vested in South East Asia markets are now looking beyond exclusive Singapore ETFs and towards wide spectrum products that are centric on fast emerging markets like Indonesia, Malaysia and even frontier nations like Cambodia which has posted one of the strongest economic growth figures for 2012.
This side of Asia has remained indeed very strong even during the Global economic crisis. European distress and despair in terms of its overall economy still continues to top the news and even in the United States unemployment figures remain significantly high. China too, may remain slower for all current year's quarters amidst weak exports and low investments in the country and a testimony to that is World Bank degrading China's growth rate by 2 %. South East Asian economies and their consolidated returns on the other hand may outperform with higher growth rates than Brazil, China, India or even Russia in the coming fiscal year.
A cross border trading platform and aggressive M & A activity will go a long way in stirring investor's interest. Good corporate governance ensures strong fundamentals and the players of the ASEAN community seem robust. Indonesia and Malaysia, both should very well suffice their real growth outlook of +6% for the current year. The newest country of the region, Myanmar along with Laos, Cambodia and Vietnam is poised to display highest growth rates in Asia, which will reflect profitably on their most active trading partners like Thailand, Singapore, Malaysia and Indonesia.
Business Activity of the area is well represented by a united body called ASEAN - The Association of South East Asian nations. It comprises of 10 nations namely - Indonesia, Laos, Brunei, Cambodia, Myanmar, Thailand, Vietnam, Singapore, Malaysia and Philippines and the majority of economic activity is concentrated in four of these nations - Indonesia, Malaysia, Thailand and Singapore. According to International monetary fund (NYSE:IMF) the GDP growth rate for Malaysia is expected to be 4.7% for the year 2013, Indonesia is expected to grow at the rate of 6.3% in 2013 and for the same year Thailand and Singapore's growth level is predicted to be 7.5% and 3.5%. In fact this entire region has a strong upward future GDP growth rate.
Investors, who have experienced nothing but a perpetual gloom form the Euro Zone and American exchanges may mull a focus on to other emerging economies in Asia especially the ones that form the ASEAN League where a better growth forecast in the near term is thriving on increasing domestic consumptions and demands backed by good governance of the policy makers.
Buying into ASEAN 40 Index ETFs is encouraged on the pretext of their immunity to the western crisis, and United States on the road to its recovery has added more favorable conditions. In order to avoid certain risks like market volatility, geopolitical and liquidity problems; an ETF approach seems the right way to go. This is due to its basket methodology and overall flexibility when it comes to trading. Invest in Southeast Asia ETF tracking the performance of the FTSE ASEAN 40 index encompasses the largest and the most liquid companies of the five vital nations of the said region (Indonesia, Philippines, Malaysia, Thailand and Singapore). These funds that normally charge an expense fee up to 65 basis points annually also benefit their participants in form a dividend yield along with high annual value growths.
Global X Southeast Asian ETF [ASEA] attunes to the movement of the name sake benchmark and charges an annual expense at the rate of 65 basis points. ASEA ETF has delivered a close to 11% return for 2012, which is much higher than the similar but country centric products like Thailand ETF. Exposure wise, ASEA holds equity of the 40 most active stocks of the ASEAN region and investors can acquire top assets in the form of DBS Group Holdings, Sing-Tel and Overseas China Bank among other stocks.