APAC Investors See Through Elections Fog, Focus on Central Banks, Rates: Schroders

Schroders: Inflationary Pressures, China Covid-19 Policy Impacts in Sight

Amidst the political uncertainties surrounding the upcoming US midterm elections, investors in the Asia-Pacific region remain focused on the actions of central banks and interest rate movements, according to Schroders' latest investment outlook.

In a recent media briefing, Schroders' Head of Multi-Asset Solutions for Asia Pacific, King Fuei Lee, said that investors are looking past the near-term noise caused by the elections and are instead focusing on the longer-term drivers of markets, particularly the policies of central banks.

According to Lee, investors are particularly concerned about the impact of inflation on their portfolios and are closely watching the actions of central banks as they try to bring inflation under control.

Key Considerations for APAC Investors

Schroders has identified several key considerations for investors in the Asia-Pacific region in the current environment:

• Inflationary pressures: Inflation remains a key concern for investors, and central banks are expected to continue raising interest rates in an effort to bring it under control. This could lead to a slowdown in economic growth.
• China's COVID-19 policy: China's strict zero-COVID policy is continuing to weigh on the country's economy and could have a negative impact on the region as a whole.
• Interest rate movements: Central banks around the world are raising interest rates, which could lead to higher borrowing costs for businesses and consumers.
• Geopolitical risks: The ongoing war in Ukraine and tensions between the US and China are adding to the uncertainty in the global economy.

Despite these challenges, Lee believes that there are still opportunities for investors in the Asia-Pacific region.

"We believe that there are still pockets of value in the region, particularly in countries with strong fundamentals and attractive valuations," he said.

For example, Schroders is overweight on India and Indonesia due to their strong economic growth and favorable demographics.

Conclusion

In conclusion, investors in the Asia-Pacific region are advised to remain focused on the long-term fundamentals of the economy and the actions of central banks, while being aware of the risks posed by geopolitical tensions and the ongoing COVID-19 pandemic.

By taking a strategic approach and investing in companies with strong fundamentals and attractive valuations, investors can position themselves for success in the current environment.