BlackRock beefs up Hong Kong leadership on Asian equity prospects

BlackRock, which manages about US$5.42 trillion in assets, has restructured its global emerging markets team, moving senior staff to Hong Kong.

The move reflects the importance of Asia Pacific and comes amid efforts to use technology and data analytics to support the asset management giant’s global research platform, according to Belinda Boa, head of active investments for the region.

“With the restructuring, we’re going to be engaged significantly across active equities in the next 12 to 18 months,” Boa said.

Andrew Swan was appointed Hong Kong-based head of global emerging markets and Asian equities, and Gordon Fraser will relocate to the city as lead portfolio manager for some of the global core emerging market strategies. Doug Chow has been appointed global head of active equities integration and data, based in Hong Kong.

The global emerging markets platform will have 65 people in total.

Asia is seeing signs of a pick-up in real and nominal growth, and the recovery of corporate profits is expected to be sustainable amid attractive valuations, Swan said.

Asia’s first-quarter profit growth was up 25 per cent year on year, the best since 2010, driven by structural parts of the economy such as the IT sector as well as cyclicals such as materials and energy, Swan said. Meanwhile Asia’s stock market has risen about 20 per cent but this was accompanied by earnings growth being revised up by 18 to 19 per cent, meaning valuation multiples have not expanded.

“We do expect investors to get more comfortable on the sustainability of profit growth in Asia, and add to their underweight positions in their portfolios,” Swan said.

BlackRock’s Asian Dragon Fund is overweight China, which has the highest earnings growth and cheapest valuations in the region. Better corporate discipline and positive signs of reform are driving profit growth. The fund is also overweight Indonesia but it is underweight in Hong Kong, Taiwan and Singapore.

Swan likes financials for the first time in several years, adding exposure in the last six months in anticipation of a recovery across Asia. He also likes materials and energy, which have been benefitting from a reflationary cycle. He is underweight the IT sector, which is seen as expensive while cautious of the semiconductor sector. Telecom and staples are also not expected to see growth.