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Countries in Asia are emerging from COVID-19 in much better shape; economically and socially; when compared to other parts of the world. This gives the region an advantage for growth, championed by China.
Countries in Asia are emerging from COVID-19 in much better shape; economically and socially; when compared to other parts of the world. This gives the region an advantage for growth, championed by China.
Asia showed impressive levels of preparedness and control in dealing with COVID-19. In 2021, the region is projected to recover quicker and grow faster than the rest of the world (Figure C6).
With stronger domestic appetite in Asia, particularly from China, Asian countries have increased trading with one another (Figure C6). We also see a strong demand in technological products from Taiwan and South Korea, which aids these export-led countries.
A potential risk is Asia’s heavy reliance on demand from China. Potential escalation in US-China tensions might dampen regional growth momentum. Furthermore, India continues to struggle with COVID-19 infection rates, impairing its recovery efforts.
However we are encouraged by the Asian governments’ ongoing commitment to monetary and fiscal support to limit any downward pressure on growth. The recent Regional Comprehensive Economic Partnership (RCEP) will facilitate intra-Asia Pacific trade and be an additional growth pillar for the region.
Even at valuations higher than its 10-year average (15.5x vs 12x), Asia ex-Japan equities remain cheaper than their developed market peers (20.6x). Their appeal is further boosted by growth expectation in corporate earnings for 2021 which will further improve its valuations.
This will underpin the region’s broader, longer-term upward trend.
Figure C6. China, Korea and Taiwan exports within Asia have increased this year, while Asia leads in economic growth.
Source: Bloomberg, as at 30 November 2020
