Perspective

Watch: The coronavirus impact on Asian markets


Find out how you can capture income & growth opportunities in Asia.  

Global markets experienced severe volatility in late March as the coronavirus spread and countries went into lockdown to try to contain the outbreak.

In Asia, some asset classes like REITS, which are traditionally seen as a relatively stable investment asset were significantly impacted. Many companies with sound fundamentals also suffered during this period.

While equity markets have since recovered from their lows, we do expect the investment environment to remain difficult as markets and economy continue to reel from the impacts of coronavirus. 

Read on: The coronavirus impact on markets and the economy

Asian Equities: Income-generating assets have great upside potential

We have re-entered a zero interest rate environment following the unprecedented stimulus delivery from central banks around the world. 

We expect income-generating assets such as REITs to benefit as a result. Instead of blindly chasing yields however, investors should focus on the quality of yields on offer. 

Companies offering good quality yields typically have strong cash-flows from a robust business operations, as well as a good management & governance that focus on delivering shareholder value.

Asian bonds: The potential for attractive income return for corporate bonds has increased significantly

We believe corporate bonds will become a major beneficiary of the remarkable support unleashed by policymakers. 

High quality & highly rated short-term bonds are in favour with attractive yield and potential for spread tightening to generate capital gains.

While company profitability may be impacted by the slowdown in economic growth, companies with strong balance sheets should be able to overcome this difficult period with relative ease. 

Overall, market risks remain as long as the threat of the coronavirus continues unabated. Looking ahead, we think that being nimble and fleet-footed will be the best way to navigate the challenges and opportunities across Asian markets.

Take an active & diversified approach to investing in Asia. Get on the right track with Schroders today.