Blackstone Asia head eyes growth in China, Southeast Asia

HONG KONG Tue Dec 6, 2011 11:12am EST

Michael Chae, head of private equity for Asia Pacific at the Blackstone Group, speaks during Reuters Global Investment Outlook Summit in Hong Kong December 6, 2011. REUTERS/Bobby Yip

Michael Chae, head of private equity for Asia Pacific at the Blackstone Group, speaks during Reuters Global Investment Outlook Summit in Hong Kong December 6, 2011.

Credit: Reuters/Bobby Yip

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HONG KONG (Reuters) - Blackstone Group L.P. (BX.N) sees China and Southeast Asia as top destinations for Asia investments next year as it aims to benefit from buoyant consumer markets there, the Asia-Pacific head of the private equity firm said on Tuesday.

"Certainly China will remain a core focus for us. We are long-term very bullish about China," Michael Chae told the 2012 Reuters Investment Outlook Summit in Hong Kong. "Southeast Asia, and Indonesia in particular, we also think is quite interesting."

But Chae, a former senior partner with Blackstone in New York, was quick to caution that Asia has not decoupled from the West, and that volatility in Asia and global markets is affecting investment decisions now and into 2012.

"There's an above-average level of uncertainty around macro conditions in this region and globally, which makes it a really intellectually interesting time to be alive and to be investing," he said.

Chae, who took over his role as head of Blackstone for the region in January this year, said consumption remains the core theme for investments in growth markets like China. Companies in consumer retail, healthcare and healthcare products, pharmaceuticals and leisure will be among the focus for Blackstone.

"In China and some of the other emerging markets in Asia, this is sort of a truism by now for investors, domestic consumption growth, growth of the middle class and urbanization themes," he said.

'LOOMING EXCESS CAPACITY'

Chae pointed to industrials as a sector that has fallen out of favor for some countries, including China.

"People see looming excess capacity, people see slowing export demand. Those are real headwinds," he said, adding that potential deep value opportunities could emerge in some industrial subsectors if an indiscriminate capital pullback continues.

Though macroeconomic headwinds could create interesting buying opportunities in Europe, a surge in volatility has made investing beyond distressed assets a challenge, he added.

"You have to plan for the worst, which makes investing other than in a distressed situation harder today," Chae said, discussing certain developed markets in Europe.

(Additional reporting by Michael Flaherty, Nishant Kumar, Alex McMillan and Chyen-yee Lee; Editing by Muralikumar Anantharaman and Michael Flaherty)

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