Aberdeen favours Asia stocks

SINGAPORE (Reuters) - Aberdeen Asset Management (ADN.L) favours firms with exposure to emerging Asia over those that depend on developed countries, and said the region could start to "decouple" from the West later this year.

"There is an important distinction to be made between recession in the West which is structural and will take years to clear and in Asia where it is cyclical," the UK fund house's director and fixed income specialist Donald Amstad told a media briefing on Thursday.

Aberdeen said Asian governments and consumers had little debt and could stimulate their economies by increasing domestic consumption, unlike in countries such as the United States and Britain where debt levels were already high.

"In the U.S., total debt to GDP is at an absurd level and it will take many, many years to clear," the firm's Asian strategist Peter Elston said.

Aberdeen said countries such as China could drive their own growth without relying on exports, giving a boost to the region.

With about $34 billion (23.35 billion pounds) in Asian assets, Aberdeen is one of the region's biggest retail fund managers.

Its flagship Pacific Equity Fund lost 46 percent in the 12 months to January against a 52 percent drop in the MSCI Asia Pacific ex-Japan index.

Aberdeen said it is invested in firms with strong balance sheets and companies which are also market leaders in their respective businesses.

Its top Asia ex-Japan holdings include Australian insurer QBE (QBE.AX), China Mobile (0941.HK), Hong Kong's Jardine Strategic (JSH.SI), Singapore's Oversea-Chinese Banking Corp (OCBC.SI), Singapore Telecommunications (STEL.SI) and Taiwan Semiconductor Manufacturing (2330.TW).

Globally, its equity funds are underweight U.S. stocks and has Brazil's Petrobras (PETR4.SA), Zurich Financial (ZURN.VX) and E.ON (EONGn.DE) among its top holdings.

Elston said U.S. pretax corporate profits as a share of GDP had risen to around 13 percent from historical levels of below 10 percent, and will likely fall and revert to the average in coming years.

EURO BONDS

In fixed income markets, Aberdeen sees opportunities in high quality securitised assets and corporate bonds that offered yields of as much as 18 percent per annum.

One of the firm's recent investment was in a 5-year dollar-denominated bond issued by Korea's Export-Import Bank at a yield of over 8 percent, Amstad said.

Amstad also warned the euro could be under threat and said Aberdeen was "short" a number of European bonds, due to uncertainty within Europe where spreads on government bonds issued by peripheral countries have widened over those of Germany and France.

The European Central Bank has been overly cautious in cutting interest rates and that has put Europe's economies under a lot of pressure, he added.

(Reporting by Kevin Lim; Editing by Anshuman Daga)