Preparing for the APAC Market Bloom

FOR IMMEDIATE RELEASE
(Free-Press-Release.com) February 24, 2010 -- Macao, China - Interview with: Hansjoerg Germann, Chief Investment Officer, Asia-Pacific & Middle East, Zurich Financial Services Group

No region has been spared in the recent economic crisis but Asia-Pacific looks likely to emerge stronger than most, with several well-performing economies and plenty of opportunities on the horizon. To get the most out of a region that will be driving global growth, investors should review their investment and risk assessment strategies and prepare for when the markets take full speed. Hansjoerg Germann, Chief Investment Officer, Asia-Pacific & Middle East of the Zurich Financial Services Group, and the Chairman of the marcus evans APAC Investments Summit 2010 taking place in Macao, China, April 21 – 23, 2010, shares his thoughts on asset liability management and his solutions for the current low-yield investment environment.

What are the key challenges facing institutional investors in the APAC region at the moment, and what solutions would you recommend?

Hansjoerg Germann: In most Asian markets - excluding Australia and Indonesia - interest rates and bond market yields are very low. Bond market yield curves tend to be good predictors of the future; quite efficient tools to see where interest rates are heading using today’s information, as these markets are frequently analysed and traded by professional investors. If we take this to be true, we can draw the conclusion that long-term yields will stay low for quite some time, probably years. This low-yield environment is something new to most of Asia.

After strong performance of prices, real estate yields in the region are also lower, but somewhat consistent with the bond markets. Equities have recovered very strongly, and valuations today already assume a relatively good development of corporate earnings for the next reporting periods. However, that is a bit risky, as it is unclear whether these good earnings expectations will actually materialise, so we should be careful with equity markets and accept lower future yields than in the past as well.

It is very difficult to find a solution to the low-yield problem, but what we can do is focus on the things that we can influence: one of them being expenses. Investment expenses are the only things that are certain in our portfolios and they can be planned and managed. If an average sized institutional investor has 1.5 per cent gross yield and 0.15 per cent (i.e. 15 basis points) in expenses, that means 10 per cent of the gross yield is lost. When interest rates were higher in the past, this cost element in proportion to the yield was much lower.

To view the complete release, please visit http://www.me-uk.com/summit/newsletter.asp?eventid=16089&RecID=1636

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