- Despite the rapid appreciation of equity value, the valuation for ASEAN equities is still around average compared to historical average.
- The global economy is starting to recover as evidenced by recent economic indicators in the US and Asia. Tail risks have also fallen, therefore the downside risks for equities have reduced significantly.
- ASEAN economies are well positioned to benefit from the recovery in global economy as more companies shift their production factories from China to countries like Indonesia and Vietnam due to lower production cost (even after factoring in the difference in productivity, workers in Southeast Asia are still much cheaper than China now, and the productivity gap is only going to narrow over time).
- As more foreign investments are made into these countries, currencies for ASEAN countries may appreciate against the USD. The foreign exchange rates for ASEAN countries against USD are still below the pre-Asian Financial Crisis level in 1997.
I should have made this purchase a while ago but due to certain compliance requirements I can finally make the investment now after some delay. Since equity prices have increased so much in the past three months, I don't expect the investment to have a very high return but the risk/reward still looks attractive.
