Trump-Driven Volatility Sends Asian Funds Searching for Shelter

Dividend Shares

Another area that’s tipped to provide a shelter from the current high volatility is in companies with a track record of high dividend payments. A gauge of such firms has returned 15% over the past year, beating the 12% gain from a broad basket of regional stocks.

“We like the following areas in the current volatility — Singapore and Australia as high yield, higher quality markets with more diversified trade,” said Sat Duhra, a portfolio manager at Janus Henderson Investors in Singapore.

Singapore’s benchmark stock index yields 4.9% based on estimated dividends for the next 12 months, while Australia’s yields 3.4%. Those compare with 2.5% for the broad MSCI Asia Pacific gauge.

Duhra said he also favors higher-yielding Chinese state-owned enterprises as they are likely to be supported by Beijing’s directive to guide companies to increase shareholder returns.

Domestic Giants

Money managers say another strategy to reduce the tariff risk is to put funds into countries with relatively large domestic markets and a correspondingly small reliance on exports.

India and Indonesia both have large internal markets and their “growth trajectories are less tied to the ebbs and flows of international trade, making them potentially more resilient,” said Manish Bhargava, chief executive officer at Straits Investment Management in Singapore.

India’s exports represented about 21.9% of gross domestic product in 2023, while Indonesia’s was 21.8%, according to data published by the World Bank. Those figures compare with about 29.3% for the world as a whole, and more than 170% for a trading hub such as Singapore.

India also offers “compelling opportunities” as the government is prioritizing infrastructure development, which presents a buffer against external trade dynamics, Straits Investment’s Bhargava said.

Indian Bonds

India also provides another asset class that promises protection from the growing global trade disputes: government bonds.

The nation’s debt appears attractive over the medium term due the country’s strong economic fundamentals and alluring real yields, said Murray Collis, chief investment officer for fixed income, Asia ex-Japan, at Manulife Investment Management in Singapore.

At the same time, the US is “less likely to implement tariffs on India given the smaller trade deficit of India compared with countries in the region,” he said.

India’s government bonds accessible to foreigners returned 6.8% last year, compared with a gain of 2% for emerging-market debt as a whole, according to data compiled by Bloomberg.

–With assistance from Chiranjivi Chakraborty, Joanne Wong, Abhishek Vishnoi and Catherine Bosley.

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