US election reaction: impact on Asian equities

09/11/2016

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​Andrew Gillan, Head of Asia (ex Japan) Equities, explains the potential implications of the Trump victory for Asian equity markets in the short and longer term.

 
The obvious kneejerk action is negative for all equity markets and Asia’s trading today reflects that as the Trump victory appeared increasingly likely and was then confirmed. Why is Asia affected so much by the US election? The key rhetoric from Donald Trump in his campaigning was that emerging markets have been taking away US jobs and that he is against some of the free trade agreements in place, including the proposed Trans Pacific Partnership. He is therefore likely to be more protectionist in his policies, which will be negative for global trade.
 
What does it mean for our Asia Growth strategy’s positioning? We are not changing our positioning as a result of the election. Our key overweights by geography within Asia are India and Taiwan and, by sector, in Information Technology (IT) and Consumer Staples. We remain comfortable with these positions. In IT, we have a mixture of domestic internet companies, such as Tencent, Baidu and Netease in China, which can all generate decent revenue and profit growth regardless of the broader global growth environment. Within technology we retain clear leaders, such as Taiwan Semiconductor and Samsung Electronics, which we believe have strong attributes and have clearly demonstrated that they can compete with the best globally. Similarly, we have exposure to the Apple supply chain in Asia and, while I would expect weakness in the short term, these companies are not competing simply on lower wages but on innovation and intellectual property.
 
In both Taiwan and India, we have a large proportion of our exposure to the domestic economies, which is also a reflection of our overweight to consumer staples. I would expect this sector to be more defensive if markets continue to sell off as I do not expect consumption of staples in these markets to come under significant pressure as a result of the US election.
 
Taking a step back, Asia remains the world’s growth engine and while exports to and trade with the US are important drivers of some Asian economies, they are far from the only source of growth and, like the shock event of Brexit, I would not be surprised to see investors refocus on the attractive demographics and consumption story in many of Asia’s emerging markets. I would expect markets to trade lower in the short-term as investors reduce risk and equity exposure. Within the region, attention will focus on the Chinese economy and how the Chinese Renminbi will react to any risk of increased trade wars globally.
 

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Past performance is not a guide to future performance. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.

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Janus Henderson Asia Pacific Capital Growth Fund

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Janus Henderson Horizon Asian Growth Fund

The Janus Henderson Horizon Fund (the “Fund”) is a Luxembourg SICAV incorporated on 30 May 1985, managed by Henderson Management S.A. Any investment application will be made solely on the basis of the information contained in the Fund’s prospectus (including all relevant covering documents), which will contain investment restrictions. This document is intended as a summary only and potential investors must read the Fund’s prospectus and key investor information document before investing. A copy of the Fund’s prospectus and key investor information document can be obtained from Henderson Global Investors Limited in its capacity as Investment Manager and Distributor.

Issued by Janus Henderson Investors. Janus Henderson Investors is the name under which investment products and services are provided by Janus Capital International Limited (reg no. 3594615), Henderson Global Investors Limited (reg. no. 906355), Henderson Investment Funds Limited (reg. no. 2678531), AlphaGen Capital Limited (reg. no. 962757), Henderson Equity Partners Limited (reg. no.2606646), (each registered in England and Wales at 201 Bishopsgate, London EC2M 3AE and regulated by the Financial Conduct Authority) and Henderson Management S.A. (reg no. B22848 at 2 Rue de Bitbourg, L-1273, Luxembourg and regulated by the Commission de Surveillance du Secteur Financier).

We may record telephone calls for our mutual protection, to improve customer service and for regulatory record keeping purposes.

Past performance is not a guide to future performance. The performance data does not take into account the commissions and costs incurred on the issue and redemption of units. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested. Tax assumptions and reliefs depend upon an investor’s particular circumstances and may change if those circumstances or the law change. If you invest through a third party provider you are advised to consult them directly as charges, performance and terms and conditions may differ materially.

Nothing in this document is intended to or should be construed as advice. This document is not a recommendation to sell or purchase any investment. It does not form part of any contract for the sale or purchase of any investment.

The Fund is a recognised collective investment scheme for the purpose of promotion into the United Kingdom. Potential investors in the United Kingdom are advised that all, or most, of the protections afforded by the United Kingdom regulatory system will not apply to an investment in the Fund and that compensation will not be available under the United Kingdom Financial Services Compensation Scheme.

Copies of the Fund’s prospectus and key investor information document are available in English, French, German, and Italian. Articles of incorporation, annual and semi-annual reports are available in English. Key Investor document is also available in Spanish. All of these documents can be obtained free of cost from the local offices of Janus Henderson Investors: 201 Bishopsgate, London, EC2M 3AE for UK, Swedish and Scandinavian investors; Via Dante 14, 20121 Milan, Italy, for Italian investors and Roemer Visscherstraat 43-45, 1054 EW Amsterdam, the Netherlands. for Dutch investors; and the Fund’s: Austrian Paying Agent Raiffeisen Bank International AG, Am Stadtpark 9, A-1030 Vienna; French Paying Agent BNP Paribas Securities Services, 3, rue d’Antin, F-75002 Paris; German Information Agent Marcard, Stein & Co, Ballindamm 36, 20095 Hamburg; Belgian Financial Service Provider CACEIS Belgium S.A., Avenue du Port 86 C b320, B-1000 Brussels; Spanish Representative Allfunds Bank S.A. Estafeta, 6 Complejo Plaza de la Fuente, La Moraleja, Alcobendas 28109 Madrid; Singapore Representative Janus Henderson Investors (Singapore) Limited, 138 Market Street #34-03/04 CapitaGreen, Singapore 048946; or Swiss Representative BNP Paribas Securities Services, Paris, succursale de Zurich, Selnaustrasse 16, 8002 Zurich who are also the Swiss Paying Agent. RBC Investor Services Trust Hong Kong Limited, a subsidiary of the joint venture UK holding company RBC Investor Services Limited, 51/F Central Plaza, 18 Harbour Road, Wanchai, Hong Kong, Tel: +852 2978 5656 is the Fund’s Representative in Hong Kong.

Information on this document is on Janus Henderson Investors' best endeavours.

Specific risks

  • Shares can lose value rapidly, and typically involve higher risks than bonds or money market instruments. The value of your investment may fall as a result.
  • This fund is designed to be used only as one component in several in a diversified investment portfolio. Investors should consider carefully the proportion of their portfolio invested into this fund.
  • The Fund could lose money if a counterparty with which it trades becomes unwilling or unable to meet its obligations to the Fund.
  • Emerging markets are less established and more prone to political events than developed markets. This can mean both higher volatility and a greater risk of loss to the Fund than investing in more developed markets.
  • Changes in currency exchange rates may cause the value of your investment and any income from it to rise or fall.
  • If the Fund or a specific share class of the Fund seeks to reduce risks (such as exchange rate movements), the measures designed to do so may be ineffective, unavailable or detrimental.
  • Any security could become hard to value or to sell at a desired time and price, increasing the risk of investment losses.

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