Investors seeking income-bearing stocks could benefit from having more exposure to companies in the Far East, Mike Kerley has said.
The Fund Manager of Henderson Far East Income fund said that throughout this year there has been a pick-up in performance in emerging markets, mainly because of an easing up of the distortion of (missing word [inflation?]) created as a result of quantitative easing in Western economies.
He said: “QE has favoured developed markets over emerging markets, which will ease with the tapering of QE” but added that there was “still a bit further to go”.
Discussing geopolitical changes in India, he said: “India is in some ways is in a much better position than China, but it has been held back by lack of infrastructure spending and bureaucracy”.
However, he said the fact that markets have priced in such an improvement has resulted in slim chances of yielding equity returns from developed markets. He added, though, that on a stock level, many companies in Asia and the Far East were poised to deliver good dividend growth.
Among his top picks he cited Petro China, which had “spent huge amounts of money gathering oil and gas but not making lots of money”, but was now focusing more on profitability and relying less on subsidy, which Mr Kerley said would ultimately lead to higher dividends.
Adviser view
Paul Milburn, investment analyst with Lowes Financial Management, said: “When investing for overseas equity income we have a bias toward global funds, to provide clients with a diverse regional allocation. Investing in Asia for equity income however offers attractive opportunities. Asia offers some of the highest yields globally.”
