Robeco logo

Disclaimer

1. General
Please read this information carefully.

This website is prepared and issued by Robeco Hong Kong Limited ("Robeco"), which is a corporation licensed by the Securities and Futures Commission in Hong Kong to engage in Type 1 (dealing in securities); Type 2 (dealing in futures contracts); Type 4 (advising in securities) and Type 9 (asset management) regulated activities. The Company does not hold client assets and is subject to the licensing condition that it shall seek the SFC’s prior approval before extending services at retail level. This website has not been reviewed by the Securities and Futures Commission or any regulatory authority in Hong Kong.

2. Important risk disclosures
Important risk disclosures Robeco Capital Growth Funds (“the Funds”) are distinguished by their respective specific investment policies or any other specific features. Please read carefully for the risks of the Funds:

  • Some Funds are subject to investment, market, equities, liquidity, counterparty, securities lending and foreign currency risk and risk associated with investments in small and/or mid-capped companies.

  • Some Funds are subject to the risks of investing in emerging markets which include political, economic, legal, regulatory, market, settlement, execution, counterparty and currency risks.

  • Some Funds may invest in China A shares directly through the Qualified Foreign Institutional Investor (“QFII”) scheme and / or RMB Qualified Foreign Institutional Investor (“RQFII”) scheme and / or Stock Connect programmes which may entail additional clearing and settlement, regulatory, operational, counterparty and liquidity risk.

  • For distributing share classes, some Funds may pay out dividend distributions out of capital. Where distributions are paid out of capital, this amounts to a return or withdrawal of part of your original investment or capital gains attributable to that and may result in an immediate decrease in the net asset value of shares.

  • Some Funds’ investments maybe concentrated in one region / one country / one sector / around one theme and therefore the value of the Fund may be more volatile and may be subject to concentration risk.

  • The risk exists that the quantitative techniques used by some Funds may not work and the Funds’ value may be adversely affected.

  • In addition to investment, market, liquidity, counterparty, securities lending, (reverse) repurchase agreements and foreign currency risk, some Funds are subject to risk associated with fixed income investments like credit risk, interest rate risk, convertible bonds risk, ABS risk and the risk of investments in non-investment grade or unrated securities and the risk of investments made in non-investment grade sovereign securities.

  • Some Funds can use derivatives extensively. Robeco Global Consumer Trends Equities can use derivatives for hedging and efficient portfolio management. Derivatives exposure may involve higher counterparty, liquidity and valuation risks. In adverse situations, the Funds may suffer significant losses (even a total loss of the Funds’ assets) from its derivative usage.

  • Robeco European High Yield Bonds is subject to Eurozone risk.

  • Investors may suffer substantial losses of their investments in the Funds. Investor should not invest in the Funds solely based on the information provided in this document and should read the offering documents (including potential risks involved) for details.

3. Local legal and sales restrictions
The Website is to be accessed by “professional investors” only (as defined in the Securities and Futures Ordinance (Cap.571) and/or the Securities and Futures (Professional Investors) Rules (Cap.571D) under the laws of Hong Kong). The Website is not directed at any person in any jurisdiction where (by reason of that person’s nationality, residence or otherwise) the publication or availability of the Website is prohibited. Persons in respect of whom such prohibitions apply or persons other than those specified above must not access this Website. Persons accessing the Website need to be aware that they are responsible themselves for the compliance with all local rules and regulations. By accessing this Website and any of its pages, you acknowledge your agreement with understanding of the following terms of use and legal information. If you do not agree to the terms and conditions below, do not access this Website or any pages thereof.

The information contained in the Website is being provided for information purposes.

Neither information nor any opinion expressed on the Website constitutes a solicitation, an offer or a recommendation to buy, sell or dispose of any investment, to engage in any other transaction or to provide any investment advice or service. The information contained in the Website does not constitute investment advice or a recommendation and was prepared without regard to the specific objectives, financial situation or needs of any particular person who may receive it. An investment in a Robeco product should only be made after reading the related legal documents such as management regulations, prospectuses, most recent annual and semi-annual reports, which can be all be obtained free of charge at www.robeco.com/hk/en and at the Robeco Hong Kong office.

4. Use of the Website
The information is based on certain assumptions, information and conditions applicable at a certain time and may be subject to change at any time without notice. Robeco aims to provide accurate, complete and up-to-date information, obtained from sources of information believed to be reliable. Persons accessing the Website are responsible for their choice and use of the information.

5. Investment performance
No assurance can be given that the investment objective of any investment products will be achieved. No representation or promise as to the performance of any investment products or the return on an investment is made. The value of your investments may fluctuate. The value of the assets of Robeco investment products may also fluctuate as a result of the investment policy and/or the developments on the financial markets. Results obtained in the past are no guarantee for the future. Past performance, projection, or forecast included in this Website should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is made regarding future performance. Fund performance figures are based on the month-end trading prices and are calculated on a total return basis with dividends reinvested. Return figures versus the benchmark show the investment management result before management and/or performance fees; the fund returns are with dividends reinvested and based on net asset values with prices and exchange rates of the valuation moment of the benchmark.

Investments involve risks. Past performance is not a guide to future performance. Potential investors should read the terms and conditions contained in the relevant offering documents and in particular the investment policies and the risk factors before any investment decision is made. Investors should ensure they fully understand the risks associated with the fund and should also consider their own investment objective and risk tolerance level. Investors are reminded that the value and income (if any) from shares of the fund may be volatile and could change substantially within a short period of time, and investors may not get back the amount they have invested in the fund. If in doubt, please seek independent financial and professional advice.

6. Third party websites
This website includes material from third parties or links to websites maintained by third parties some of which is supplied by companies that are not affiliated to Robeco. Following links to any other off-site pages or websites of third parties shall be at the own risk of the person following such link. Robeco has not reviewed any of the websites linked to or referred to by the Website and does not endorse or accept any responsibility for their content nor the products, services or other items offered through them. Robeco shall have no liability for any losses or damages arising from the use of or reliance on the information contained on websites of third parties, including, without limitation, any loss of profit or any other direct or indirect damage. Third party off-site pages or websites are provided for informational purposes only.

7. Limitation of liability
Robeco as well as (possible) other suppliers of information to the Website accept no responsibility for the contents of the Website or the information or recommendations contained herein, which moreover may be changed without notice.

Robeco assumes no responsibility for ensuring, and makes no warranty, that the functioning of the Website will be uninterrupted or error-free. Robeco assumes no responsibility for the consequences of e-mail messages regarding a Robeco (transaction) service, which either cannot be received or sent, are damaged, received or sent incorrectly, or not received or sent on time.

Neither will Robeco be liable for any loss or damage that may result from access to and use of the Website.

8. Intellectual property
All copyrights, patents, intellectual and other property, and licenses regarding the information on the Website are held and obtained by Robeco. These rights will not be passed to persons accessing this information.

9. Privacy
Robeco guarantees that the data of persons accessing the Website will be treated confidentially in accordance with prevailing data protection regulations. Such data will not be made available to third parties without the approval of the persons accessing the Website, unless Robeco is legally obliged to do so. Please find more details in our Privacy and Cookie Policy.

10. Applicable law
The Website shall be governed by and construed in accordance with the laws of Hong Kong. All disputes arising out of or in connection with the Website shall be submitted to the exclusive jurisdiction of the courts of Hong Kong.

Please click the “I agree” button if you have read and understood this page and agree to the Disclaimers above and the collection and use of your personal data by Robeco, for the purposes for which such data is collected and used as set out in the Privacy and Cookie Policy, including for the purpose of direct marketing of Robeco products or services. Otherwise, please click “I Disagree” to leave the website.

I Disagree

19-05-2025 · Insight

Diversify your portfolio with Asia-Pacific equities

US markets have made up all the ground lost after the 2 April ‘reciprocal’ tariff announcement, but trade disruption combined with geopolitical tension are here to stay. This period of calm offers investors a clear opportunity to diversify equity exposure into Asia-Pacific, the world’s engine of growth.

    Authors

  • Joshua Crabb - Head of Asia-Pacific Equities

    Joshua Crabb

    Head of Asia-Pacific Equities

  • Helen Keung - Client Portfolio Manager

    Helen Keung

    Client Portfolio Manager

Summary

  1. Asia-Pacific equity inflows have turned positive in the trade turmoil

  2. Asian economies will be cushioned by monetary easing and stimulus

  3. Solid fundamentals and a big valuation discount provide a good starting point

The end of the beginning

A month is a long time in equity markets. Since 9 April when President Trump announced a 90-day pause in his plan to impose ‘reciprocal’ tariffs on the rest of the world, the S&P 500 has rallied hard. The 90-day détente between the US and China, announced on 12 May, and soft US inflation data on 13 May solidified the US market gains, putting talks of a rotation from US assets on to the back burner.

Given the US’s trading framework agreement with the UK and its 90-day détente with China still imply much higher tariffs levels, we think the euphoria may be premature. The negative impact of Trump’s trade policies will hit the US the hardest and that is not yet reflected in economic data. In previous cycles equity market weakness has translated to US dollar strength in a ‘flight-to-safety’ but that appears to have changed in this cycle with the dollar proving vulnerable to swings in market confidence. Moreover, the US fiscal position is likely to only worsen, with Trump certain to plough revenues from tariffs into tax cuts, and that will be dollar-negative. Global investors remain very overweight US equities and we believe there will be a gradual move to increase allocations to other regions, and especially Asia-Pacific.

Asia-Pacific starting to get inflows

Investors remain very underweight Asia-Pacific equities which is more a reflection of the past decade of US dominance than Asia’s economic fundamentals. However in recent weeks there has been a nascent change in trend with April 2025 inflows into Asia equity ETFs at USD 33.31 billion exceeding those into both US (USD 31.0 billion) and European (USD 9.1 billion) equivalents, indicating the region is a destination for those seeking to diversify. Japan is seen as a particularly attractive market for the ‘de-dollarization’ trade, attracting USD 57 billion into equities and bonds, the biggest monthly inflows since records began.2

Asia-Pacific equity valuations are close to trough levels compared to the US. On that basis, even given the US tariff headwinds, there is significant value to unlock. For an Asia-Pacific strategy focused on value like ours, this makes the region a target-rich stock-picking environment.

Figure 1: Asian stocks are trading at a deep discount to the US, and history

Figure 1:  Asian stocks are trading at a deep discount to the US, and history

Source: MSCI, Bloomberg, data to 2 May 2025

Pressure on to reduce US tariffs

Asia-Pacific economies are very exposed to global trade flows with major export economies like Japan, Korea and Taiwan potentially facing very high tariff levels (24%, 26% and 32%, respectively) unless they can agree a framework for reductions by early July when the 90-day reciprocal tariff pause expires. Emerging export-driven economies are in the same boat, with Vietnam (46%), Indonesia (32%), and Thailand (37%) all seeking to negotiate.

Given the détente with China, the Trump administration’s desire to be seen to do deals, and geopolitical leverage via longstanding security ties, we expect the tariff levels to trend toward the baseline 10% Trump originally set. The net effect on trans-Pacific trade will be negative, and economically this is means 2025 Asia-Pacific GDP growth estimations at around 3.7%3 at the start of the year could be difficult to achieve, but growth will still be much higher than projections for the US and Europe.

For the region, the most immediate countervailing policy response will be fiscal expansion in key economies including China, India and Indonesia. Moreover, inflation is already trending lower across the region giving central banks room to ease policy more, especially if the USD weakens further.

Positive Asia fundamentals will attract long-term investors

For investors seeking long-term diversification from an overweight position in US equities, Asia-Pacific equities have a compelling investment thesis. An Asia-Pacific portfolio gives exposure to developed markets like Australia and Singapore as well as emerging markets like Indonesia and India across all sectors from commodities and industrials to technology, financials and consumer discretionary.

Industrial powerhouses

We believe exposure to the North Asian industrial economies of China, South Korea, Taiwan and Japan is essential, with world-class companies and an increased focus on shareholder value. Japan remains the Robeco Asia-Pacific Equities strategy’s largest overweight. Reasonable valuations, increased shareholder returns, governance reform, and structural reform are all reasons to remain positive on the country. South Korea’s ‘value up’ initiative is at an earlier stage but should have a similar impact on corporate governance there.

Confidence in China’s international competitiveness and continued ability to innovate was boosted in January 2025 by the release of the DeepSeek Large Language Model (LLM), which was developed at lower cost than similar LLMs from the US. China is already capitalizing on advantages like rapid adoption of new technologies, a vast domestic market, and an unrivaled manufacturing base, to lead in key industries including electric vehicles and renewable energy. In these markets where you potentially have declining populations, Robeco’s Asia-Pacific Equities strategy focuses on optimizing capital and investing selectively, where the return on invested or the marginal return on invested capital is high.

What EM opportunities are out there?

Receive our newsletter to dive deep into EM investment opportunities.

Find out more

Dynamic emerging economies

In the emerging markets of Southeast Asia where the population is rising, increasing technology adoption and mass consumption are underpinning domestic-driven growth to complement traditional strength in commodities and manufacturing. Recent weakness due to fears over the impact of US tariffs is providing good entry points for long-term opportunities that fit into our value-driven investment process. In contrast, India equities are richly valued compared to Asian peers so we are being very selective and remain underweight the country. Nevertheless, India is building on its economic momentum by extending its manufacturing base, with trade deals with the UK, and perhaps later in the year with the US, helping. From the market peak in 2024 Indian equities have underperformed Asian peers. Combined with the recent tension with Pakistan, this has brought valuations to more reasonable levels, so we are now gradually increasing our India exposure.

Valuation gap will close

Our conviction is that the enormous valuation gap between Asia-Pacific and the US will narrow in 2025 and beyond. It is crucial to focus on the fundamentals and take advantage of the volatility to identify medium-term alpha opportunities. We believe an active approach with a tested stock selection process is the best way to build and hold long-term exposure to Asia-Pacific equities.

Footnotes

1 Source: Bloomberg – May 12 2025
2 Foreigners snap up $57bn in Japan assets in ‘liberation day’ rush – FT – 14 May 2025
3 Moody’s Analytics 2025 Macro Outlook – November 2024

Important information

The contents of this document have not been reviewed by the Securities and Futures Commission ("SFC") in Hong Kong. If you are in any doubt about any of the contents of this document, you should obtain independent professional advice. This document has been distributed by Robeco Hong Kong Limited (‘Robeco’). Robeco is regulated by the SFC in Hong Kong. This document has been prepared on a confidential basis solely for the recipient and is for information purposes only. Any reproduction or distribution of this documentation, in whole or in part, or the disclosure of its contents, without the prior written consent of Robeco, is prohibited. By accepting this documentation, the recipient agrees to the foregoing This document is intended to provide the reader with information on Robeco’s specific capabilities, but does not constitute a recommendation to buy or sell certain securities or investment products. Investment decisions should only be based on the relevant prospectus and on thorough financial, fiscal and legal advice. Please refer to the relevant offering documents for details including the risk factors before making any investment decisions. The contents of this document are based upon sources of information believed to be reliable. This document is not intended for distribution to or use by any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. Investment Involves risks. Historical returns are provided for illustrative purposes only and do not necessarily reflect Robeco’s expectations for the future. The value of your investments may fluctuate. Past performance is no indication of current or future performance.