Barings says Asian frontier markets to dominate investment opportunities in 2008

Marino Valensise, Chief Investment Officer at Baring Asset Management, writes that investors should look to Asia for growth in 2008 in an email sent to Opalesque. In an environment where market volatility is likely to remain high and the pace of global growth is likely to move lower, led by the West, Asia continues to offer the most attractive investment opportunities as intra-Asian trade continues, according to Barings.

Barings, however, warns that the UK economy faces a high risk of recession. According to Valensise, the dominance of the financial and housing sectors in the economy could spell problems in 2008 since the economy lacks diversification. In the US, Barings remains confident that a recession will be avoided, however Valensise remains vigilant, particularly looking out for any deterioration in the employment environment.

Valensise commented: “We have been spoiled over the past few years with the best of all investment worlds – growth has been global, across markets and asset classes, but this cannot continue. We are already seeing a divergence between the East and the West in terms of GDP growth. This is likely to continue in 2008, with consumer spending in the US likely to suffer dramatically as a result of resetting mortgage rates. While we are not expecting a recession yet, growth in the US is going to be much slower.

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