Investors in emerging Asian markets should not be distracted by tensions and volatility outside the region, such as in Ukraine at present, according to Matthews Asia, the San Francisco-headquartered fund manager.

Investors in emerging Asian markets should not be distracted by tensions and volatility outside the region, such as in Ukraine at present, Matthews Asia, the San Francisco-headquartered fund manager, has explained to journalists in London.

At a time when emerging markets have lagged in performance behind that of developed counterparts, attention has focused on decelerating growth in China – albeit to levels still way above those in much of the West.

Lydia So, portfolio manager of the Asia small companies fund at Matthews Asia, outlined her firm’s thinking that the situation in Russia/Ukraine won’t be much of a factor for Asian markets, and that these events don’t dictate their investment positions.

“Asia should not be lumped in with emerging markets. Last year people wanted to drag Asia along to elude that the Asian financial crisis might be happening again. To us, that might be an exaggeration,” she said.

Fast-moving events in Ukraine, and Russia’s actions in recent weeks, which have seen the former Soviet Union hit with sanctions by the European Union and US, have prompted concerns that global markets will be affected, particularly in emerging regions. A combination of large cash holdings by some investment managers and slowing emerging markets has left investors planning their next move after voters in Crimea last week overwhelmingly chose to join Russia.

Matthews Asia, which as its name suggests, has a specialist focus on Asia-Pacific, oversaw a total of $25.9 billion of client assets as at the end of 2013. In the case of its Matthews China Dividend Fund – one of the funds discussed at the briefing – it has, since its launch on 30 November, 2009, racked up total returns (capital growth plus reinvested dividends) of 11.26 per cent, against a market benchmark of just 2.4 per cent. The firm’s Asia Small Companies Fund, launched on 30 April last year, has so far made returns of 2.4 per cent, while the broader market fell 1.42 per cent.

Asia’s economy is not as sensitive as people think since natural gas is the only concerning Russian trade, said So, while tensions in or between China, Japan, and sometimes North Korea, are more likely to affect the local economy.

As for forecasts, the firm expects China to achieve GDP growth of 7.7 per cent in 2014, pointing out that this contrasts with a peak of 14.2 per cent in 2007 on the eve of the global financial crisis.  

“Asia, by and large, is in good shape with exception of Indonesia and India’s current ‘political overhang’,” she added.

Separately, Robert Horrocks, chief investment officer at the firm, is to speak at the WealthMatters conference in Hong Kong, on 27 March. The event is hosted by the publisher of this news service; for more details on this event, click here.