Wealth Manager - the site for professional investment managers

Register to get unlimited access to all of Citywire’s Fund Manager database. Registration is free and only takes a minute.

Hugh Young: emerging market sell-off 'illogical'

Hugh Young: emerging market sell-off 'illogical'

Veteran Asia investor Hugh Young believes the recent emerging markets sell-off has gone too far but that it will also likely lead to value returning to Asia as a result.

Speaking to Citywire in Aberdeen Asset Management’s Singapore office, the former Citywire AAA-rated manager admitted his performance has suffered in the past year as emerging markets as a whole took a hit in 2013.

This applies to a number of funds Young runs, which includes Asia-focused funds such as Aberdeen Asia Pacific Equity and Aberdeen Global - Asian Smaller Companies.

‘We are having one of our bad patches but I think it’s just another blip among other blips,’ he said. ‘When we look at our companies in our portfolio there is a handful that is not doing well but most of them are doing fine.’

‘It’s interesting to see the revulsion against emerging markets now. To me it seems illogical. Logical when you look at the economies, but illogical when you look at the companies.’

While companies’ earnings per share are not as high as they once were, added Young, there has also been a lot of macro movement with many investors getting out of emerging markets and Asia.

‘It feels as though the tide has swung too far. My intuition as an investor is there is some good value coming out of here. We were at 15 times earnings before and now we’re at 11 times.’

‘Value is certainly returning and anyone who has a long-term view will be dipping their toes back into Asia.’

While he still believes the consumer sector is still the place to be in Asia for the next ten years, he has been slightly trimming his exposure to the sector as it has performed well in recent months and valuations are tight.

Indonesia over China

Across his funds his main area of research is, and has been for some time, China, albeit for very little reward, he said.

‘We’ve found it very hard to find quality companies in China. We’re finding better Indonesian companies that we are more comfortable on.’

The policy around stock ownership in China is unclear and while some companies in the country have done well recently. He said he has never been tempted to add them for short-term boosts to his performance.

He currently has very little exposure to China, albeit some indirect exposure through Hong Kong to the country’s tech sector, he added.

While Young has not added any new stocks to his portfolios over the past six months, another area he is focusing his research on is Japan.

‘Japan is a big chunk of pan-regional funds but compared to benchmark we are underweight.’

‘We find there are some good companies in Japan, especially in small caps, but there’s still a huge battle going on there on corporate governance.’

In some cases, he said, shareholders were not guaranteed to be granted access to annual meetings of certain Japanese companies.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Related Fund Managers

Hugh Young
Hugh Young
47/59 in Equity - Asia Pacific Excluding Japan (Performance over 3 years) Average Total Return: 18.13%
Citywire TV
Citywire TV
Citywire TV
When Brewin's Gutteridge met BlackRock's easy Rieder

When Brewin's Gutteridge met BlackRock's easy Rieder

Following Federal Reserve chair Janet Yellen’s testimony, Ben Gutteridge, head of fund research at Brewin Dolphin, grills Rick Rieder, CIO of fundamental fixed income at BlackRock.

Play Sam Vecht: the best opportunities in frontier markets

Sam Vecht: the best opportunities in frontier markets

Blackrock's Vecht evaluates frontier markets and explains where he sees the opportunities

Play Where A-rated Pattullo is finding the best bond opportunities

Where A-rated Pattullo is finding the best bond opportunities

Henderson Global Investors head of retail fixed income explains how he is managing his fund against the surprise current monetary policy divergence.

Your Business: Cover Star Club

Profile: meet the man building Towry into an £11bn giant

Profile: meet the man building Towry into an £11bn giant

As a former engineer who worked on Hong Kong International Airport, Rob Devey is not afraid of taking on major projects

Wealth Manager on Twitter