The company said the AEC, which aims to create a single market for trade across the ASEAN region, will support “already strong” growth throughout the area in markets such as Indonesia, Vietnam, and the Philippines.
The AEC will also attempt to fully integrate the ASEAN region into the global economy by forming a bloc of 600 million consumers.
Barings said it expects the group will help Southeast Asia “deliver superior risk-adjusted returns for investors compared to other emerging markets”.
“The ASEAN region has recovered sharply from the macro and political turbulence seen in 2013 and widespread structural reforms have heightened the medium term growth outlook,” he said. “In an indication of this strength, foreign direct investment into the region has surpassed FDI into China for the past two years.”
SooHai Lim, investment manager at Barings, said political risk had previously been a major issue in the ASEAN region, but had subsided over the past six months in its two most affected countries, Indonesia and Thailand.
“The ASEAN market’s cyclical recovery from the 2013 and early 2014 volatility has had a tangible impact on investors’ sentiment across the region, with momentum fully supported by the start of the AEC in 2015,” he added.
In August, the ASEAN collective schemes framework (CIS) was launched, allowing investors in Singapore, Malaysia, and Thailand access to cross-border financial products.
Under the framework, fund managers can offer CIS-constituted funds from their home jurisdiction directly to retail investors in the other two jurisdictions.
