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Asia Pacific equities get reality check

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Further falls in Asian equities could create opportunities for investors, according to asset management company Aberdeen.

Hugh Young, managing director of Aberdeen Asset Management Asia has warned investors in Asian equities to remain cautious, but admitted that the economy of the region remains fundamentally sound. He added that recent market volatility has created buying opportunities, with the share prices of many well-run companies trading at attractive levels.

According to Young, declines in the Asian equities market this week were a part of a trend that started during the last quarter of 2007. Investors have injected large amounts of capital into Asian stock markets, despite rising raw material prices and concerns over the trickle-down effect of the sub-prime crisis. However, he believes that while a lot of it was invested in good companies, money was also invested in poor quality companies.

Young said: “Recent share price falls in Asia are not surprising, and we expect the nervousness that has been building in markets for the past couple of months to continue, with investors in Asia watching for signs of an export slowdown.

“While some sectors and markets now look vulnerable to further corrections, others still offer decent value to high conviction stock-pickers, such as Aberdeen. We will continue to take advantage of any share price weakness to invest in quality companies at attractive prices.” 

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