Publications

- November 1, 2019: Vol. 11, Number 10

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Quest for income: Asia has been a good growth play but traditionally has not been a place international investors look for yield. Will that ever change?

by Alex Frew McMillan

Good luck finding yield in Hong Kong. World-record property prices mean investors into office real estate are lucky to eke out rental returns of 2.5 percent on a purchase. This summer’s turmoil in the city hardly justifies the risk, a small shift in the political situation easily eating up any of that return, and more.

While this is an extreme situation, Asia in general has not favoured slow and steady investors searching for yield plays. Recent geopolitical tensions over trade and other issues may have raised the region’s risk profile — unjustifiably, some would say. Whatever the case, in the past decade of easy central bank money, it has been easier to chase growth than income in Asia.

Will that change? Should it? At some point, we will surely reach a tipping point where income returns become the defining factor in investment strategies.

“Value has never gone out of favour, even in long periods of growth, and income is increasingly in demand in Asia,

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