Asia more attractive due to Western dysfunction - AVCJ Forum

"The assumptions of a lot of investors are still behind the reality. It is not clear the Western-led liberal global order is going to survive. China is challenging it; in Europe it is being challenged; and if Trump is elected that is the end of the free trade consensus that has been in place since the Second World War," said Mark Chiba, chairman and partner at The Longreach Group.

Rob Petty, managing partner and co-founder of Clearwater Capital Partners, added that instability in Europe, for example, does not only constitute the UK's recent vote to leave the EU, but also tensions in Ukraine, the emergence of a right-wing populist party in the Austrian presidential election process, and so on. By contrast, the political situation in most Asian markets has been highly stable, even though the governments are not necessarily to the taste of foreign investors.

For Clearwater, which focuses on credit and special situations, this combination of growth and stability has resulted in Asia's credit markets outperforming on a multi-year basis, challenging the notion that it represents a riskier bet than more developed regions. Ed Sippel, managing director and co-head of Asia at TA Associates, agreed that the risk premium traditionally expected by investors when deploying capital in the region has changed - largely because growth is increasingly hard to find in other markets.

Much of this sentiment is predicated on the evolution of Asia's emerging markets and the emergence of consumer classes driven by strong fundamental demand for services ranging from housing to education to healthcare. Chiba went so far as to suggest the Asia risk premium is becoming increasingly irrelevant in the context of a new world economic order.

"I think we have reached a really interesting point where Asia is no longer the workshop of the world and a high growth market, but the center of global economic activity and maybe the center of global economic governance," he said.

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