Reasons to be optimistic about Asean equities

AFTER being unloved for some time, Asean economies look to be making a comeback and seem better placed to deal with some of the challenges dominating the current market environment.

During 2020 and 2021, North Asian markets such as mainland China, Taiwan and South Korea performed strongly. This was primarily due to the rally in tech stocks as people adapted to working from home and as demand for tech goods and services rose. In addition, these countries quickly implemented Covid-19 restrictions and vaccine programmes – meaning the socioeconomic impact of the pandemic was mitigated, and normal-ish life resumed.

Meanwhile, their Asean counterparts struggled to contain the virus, leading to severe economic disruptions and slower growth. These economies also consist of contact-intensive sectors that were severely impacted by lockdown restrictions, such as manufacturing, agriculture, and tourism. This divergence in performance created a north-south divide.