As non-performing loans in countries such as Indonesia and Thailand have endured the worst of times, Lee believes the banking sector of emerging ASEAN markets can be attractive to investors. “In addition – as central banks in the region are expected to impose fewer interest rate cuts, the net interest margin for banks is expected to improve – which bodes well for the financial sector,” he says.
As the rate of urbanisation in the ASEAN region is less than 50%, Lee says a majority of its population still lives in rural areas or makeshift housing. Pointing out that the need for basic housing is still underserved in countries such as Indonesia, he adds: “As their incomes increase, the demand for basic housing needs will increase.”
Lee reveals that government spending will also fuel infrastructure development in ASEAN countries as they upgrade airports and construct new MRT lines. “So, investors can look at investment opportunities in building contractors and companies that supply building materials as they will benefit from higher infrastructure development in the region,” he suggests.
In addition, Lee believes the industrial property market in emerging ASEAN markets will benefit from more foreign direct investment as potential investors look into the development of industrial parks and factories.
Rising income and standards of living are set to spur rising consumer demand for a wide range of products and services, according to Lee: “Investors can consider traditional investment opportunities in supermarkets, convenience stores, department stores or food and beverage companies.”