Indonesia, Vietnam and Singapore are Wall Street’s darlings in Southeast Asia

Vietnam to remove foreign ownership cap for listed companies
Hanoi Stock Exchange (Picture: Arno Maierbrugger)

US financial services majors Goldman Sachs and JPMorgan Asset Management have given business news channel CNBC their top picks for investments in Southeast Asia for 2022, and they were pointing at Indonesia, Vietnam and Singapore.

Southeast Asia as a whole is relatively insulated from geopolitical tensions elsewhere in places such as Europe, where the war in Ukraine has kept investors on the edge over the region’s economic outlook, analysts of the firms told CNBC.

Southeast Asian stocks have underperformed and been “largely ignored by global investors for a decade” said Timothy Moe, Goldman’s chief Asia Pacific equity strategist, indicating that would open opportunities for investors.

Banks are a big driver in Indonesia

“In Indonesia, we are structurally positive on the banks as the majority of the population is still unbanked or underbanked. We are currently positioned in the leading private sector and also state-owned banks as they have been proactively driving digital adoption to accelerate financial penetration,” Desmond Loh, portfolio manager at JPMorgan Asset Management, told CNBC.

Strong commodity prices have also been beneficial for export earnings in Indonesia, as well as for the country’s trade balance, he said, adding that this is likely to support the Indonesian rupiah and the near-term growth outlook in Indonesia, .

Vietnam grows despite pandemic

JPMorgan Asset Management also likes Vietnam, which Loh termed a “star performer in the past few years” in economic resiliency and growth. Vietnam is one of the few economies globally to have seen positive economic growth throughout the pandemic, he added.

“To capitalise on the growth, we are positioned in high quality consumer proxies and banks,” he said, without naming specific stocks.

Growth momentum in Singapore

Meanwhile, Singapore is the other Southeast Asian that Goldman Sachs likes and there are three main reasons for that, Moe said.

In the city state, there is an improving economic and growth momentum within a region recovering belatedly from Covid-19-related setbacks, as well as a banking sector that is heavily weighted in stock indexes and set to benefit from a switch to tighter monetary policy and rising interest rates. Adding to that is the “gradual emergence” of digital economy firms which are being included in Singapore indexes.

Stock indices beat US market

In terms of the overall stock market in the three countries, Indonesia’s Jakarta Composite has risen more than seven per cent this year, while Vietnam’s VN index is up about one per cent in the same period. Singapore’s Straits Times index has gained more than nine per cent.

In comparison, MSCI’s broadest index of Asia-Pacific shares outside Japan has dropped six per cent in the period. On Wall Street, the S&P 500 is down about 4.6 per cent so far this year, while the pan-European Stoxx 600 has dropped also about six per cent.



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[caption id="attachment_32113" align="alignleft" width="300"] Hanoi Stock Exchange (Picture: Arno Maierbrugger)[/caption] US financial services majors Goldman Sachs and JPMorgan Asset Management have given business news channel CNBC their top picks for investments in Southeast Asia for 2022, and they were pointing at Indonesia, Vietnam and Singapore. Southeast Asia as a whole is relatively insulated from geopolitical tensions elsewhere in places such as Europe, where the war in Ukraine has kept investors on the edge over the region’s economic outlook, analysts of the firms told CNBC. Southeast Asian stocks have underperformed and been “largely ignored by global investors for a decade” said...

Vietnam to remove foreign ownership cap for listed companies
Hanoi Stock Exchange (Picture: Arno Maierbrugger)

US financial services majors Goldman Sachs and JPMorgan Asset Management have given business news channel CNBC their top picks for investments in Southeast Asia for 2022, and they were pointing at Indonesia, Vietnam and Singapore.

Southeast Asia as a whole is relatively insulated from geopolitical tensions elsewhere in places such as Europe, where the war in Ukraine has kept investors on the edge over the region’s economic outlook, analysts of the firms told CNBC.

Southeast Asian stocks have underperformed and been “largely ignored by global investors for a decade” said Timothy Moe, Goldman’s chief Asia Pacific equity strategist, indicating that would open opportunities for investors.

Banks are a big driver in Indonesia

“In Indonesia, we are structurally positive on the banks as the majority of the population is still unbanked or underbanked. We are currently positioned in the leading private sector and also state-owned banks as they have been proactively driving digital adoption to accelerate financial penetration,” Desmond Loh, portfolio manager at JPMorgan Asset Management, told CNBC.

Strong commodity prices have also been beneficial for export earnings in Indonesia, as well as for the country’s trade balance, he said, adding that this is likely to support the Indonesian rupiah and the near-term growth outlook in Indonesia, .

Vietnam grows despite pandemic

JPMorgan Asset Management also likes Vietnam, which Loh termed a “star performer in the past few years” in economic resiliency and growth. Vietnam is one of the few economies globally to have seen positive economic growth throughout the pandemic, he added.

“To capitalise on the growth, we are positioned in high quality consumer proxies and banks,” he said, without naming specific stocks.

Growth momentum in Singapore

Meanwhile, Singapore is the other Southeast Asian that Goldman Sachs likes and there are three main reasons for that, Moe said.

In the city state, there is an improving economic and growth momentum within a region recovering belatedly from Covid-19-related setbacks, as well as a banking sector that is heavily weighted in stock indexes and set to benefit from a switch to tighter monetary policy and rising interest rates. Adding to that is the “gradual emergence” of digital economy firms which are being included in Singapore indexes.

Stock indices beat US market

In terms of the overall stock market in the three countries, Indonesia’s Jakarta Composite has risen more than seven per cent this year, while Vietnam’s VN index is up about one per cent in the same period. Singapore’s Straits Times index has gained more than nine per cent.

In comparison, MSCI’s broadest index of Asia-Pacific shares outside Japan has dropped six per cent in the period. On Wall Street, the S&P 500 is down about 4.6 per cent so far this year, while the pan-European Stoxx 600 has dropped also about six per cent.



Support ASEAN news

Investvine has been a consistent voice in ASEAN news for more than a decade. From breaking news to exclusive interviews with key ASEAN leaders, we have brought you factual and engaging reports – the stories that matter, free of charge.

Like many news organisations, we are striving to survive in an age of reduced advertising and biased journalism. Our mission is to rise above today’s challenges and chart tomorrow’s world with clear, dependable reporting.

Support us now with a donation of your choosing. Your contribution will help us shine a light on important ASEAN stories, reach more people and lift the manifold voices of this dynamic, influential region.

 

 

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