Trustnet Magazine Issue 21 September 2016 | Page 17

/ HENDERSON /

as dividends) – an increasingly
attractive income proposition on
a risk/reward basis. The picture
is reflected across most Asian
markets.

HOW ARE INVESTORS
REACTING?

Institutional investors, cognisant
of the eroding value in traditional
income asset classes, have been
changing their allocations towards
equities for the first time in history.
In Taiwan, the risk-based capital
requirements for insurers and
pension funds have been raised,
which could attract between $25
and $35bn towards equities over the
next five years. Singapore’s sovereign
wealth fund, GIC, is in talks to
buy 7 per cent of Vietcombank
in Vietnam. In India, the biggest
retirement manager has recently
been permitted to invest 5 to 15 per
cent of new assets in equities.
And the tendency has been for
dividend-paying stocks with a low
beta – those of lower volatility when
compared with the wider market.
A market-cap weighted index of 44
Asian stocks with dividends above
3 per cent and betas of between 0.8
and 1 (less than 1 implies lower
volatility than the market; more
than 1 implies greater) has been
climbing, especially since the
Bank of Japan introduced negative
interest rates.

A WHOLESALE CHANGE?

Thus far, the steps towards Asian
equity income have only been
tentative. In