After some ugly data out of China earlier this month, we saw a serious contraction in both Asian markets and here at home in the S&P 500. A slowdown in manufacturing is hurting consumer sentiment and ultimately weighing on GDP growth rates in China.
Unsurprisingly, negative sentiment like this has weighed on major Chinese equities and Asia stocks that trade on U.S. exchanges. Here’s a short list of big-time laggards in the region:
- China Life Insurance (NYSE:LFC), -21% year-to-date in 2013
- Oil giant CNOOC Ltd. (NYSE:CEO), -19% YTD
- Telecom China Mobile (NYSE:CHL), -9% YTD
But not everyone is a China bear right now, and some think Asia stocks could be a bargain on a pullback. Aberdeen Asset Management, a group with over $300 billion under its watch and a suite of Asia-focused funds in its portfolio, believes that “the attractive fundamentals of the Asia Pacific region are too important to ignore.”
Aberdeen notes the following:
“Asia is expected to expand by 5.8% in 2013 versus 2.1% in the U.S. and 0.2% in Europe. When one compares Asia’s strong growth record to that of the eurozone, which has entered into a recession with growth at -0.4%, or the U.S. with growth at 2.2%, we believe the attraction for investors is clear.”
The investment group also shares this really cool graphic of Asia facts:
Clearly the problem with Asia isn’t growth, of course, but expectations. The fact that China continues to cool and has been coming in under GDP forecasts is a bad thing — even if, yes, Asian economies are growing briskly.
But apparently Aberdeen thinks some growth is better than no growth, and that’s admittedly an argument that’s valid. Theoretically, a shrewd manager may be able to find growth opportunities in Asia and sidestep some of the trouble spots.
I’m personally not buying it … partially because of the challenges for China, but also because active management is the pits. But if you’re interested, Aberdeen has a host of products to play this region.
- More info on China growth and investment options. (Aberdeen)
- The World Bank is worried about Asia overheating. (MarketWatch)
- 3 reasons why China will crater in 2013. (The Slant)
Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at firstname.lastname@example.org or follow him on Twitter via @JeffReevesIP. As of this writing, he did not own a position in any of the stocks named here.