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Is now the time to buy unloved Southeast Asian stocks?
An impending interest-rate rise in the U.S. has spurred massive capital outflows from emerging markets, but some experts are not rushing for the exit just yet.
Invesco's investment director Jalil Rasheed, for one, thinks there are buying opportunities in Southeast Asia following the brutal sell-off that has taken the MSCI Southeast Asia Index down by 13 percent in the year to date.
"It has been an under-loved asset class. When there's an emerging market outflow, ASEAN will be affected because when that outflow happens, it occurs as a bloc," Rasheed told CNBC's " Capital Connection " last Wednesday. "ASEAN was over-heated for the last two to three years so this correction is long overdue and oversold in my view. It has given us a great opportunity to buy more stocks."
David Riedel, president and founder of Riedel Research Group, agrees.
"People have been overly focused on the macro themes over the last six months but opportunities are coming up for investors to look at individual names in Southeast Asia that have exposure to strong trends," Riedel said.
Equity markets in Southeast Asia lost their footing two years ago when then- Federal Reserve chairman Ben Bernanke first broached the possibility of tapering the U.S. central bank's huge bond-buying program. Now shares are crashing once again, as the Fed contemplates raising its benchmark short-term interest rate from near zero percent.
There's a 60 percent chance that the Fed will likely pull the trigger on rates in December after taking a pass in September, economists polled by Reuters said.
However, increased regional cooperation due to the establishment of the ASEAN Economic Community (AEC) by the end of 2015 will likely deliver a boost for shipping and logistics names, regardless of the Fed's actions, analysts say.
Read More Fed's Evans: Later rate hike better for economy
Bangkok-listed Precious Shipping (The Stock Exchange of Thailand: PSL-TH) which trades under the ticker PSL and Singapore's Mapletree Logistics Trust (MLT) are among Riedel's top picks in Southeast Asia.
"Precious Shipping has been a tough place to be [for investors] but it is set for a turnaround as soon as regional trade starts to pick up. In Singapore, I would also look at MLT ... this real estate investment trust (REIT) which owns logistics facilities and properties, will also benefit from more trade," Riedel noted.
Invesco, meanwhile, has "a slight bias towards companies exposed to mass market consumption" but is largely sector-agnostic when it comes to its investments in this part of the world, Rasheed told CNBC.
Certainly, not all analysts feel that Southeast Asia is a buy.
HSBC (London Stock Exchange: HSBA-GB) thinks emerging markets in North Asia offer better value due to a "big discrepancy" in profitability between defensive and cyclical plays in the region.
"Within Asia, defensive names like healthcare, consumer staples and telcos are looking very expensive ... I'm not sure if you want to buy these defensives at those level of valuations," Bill Maldonado, CIO for Asia Pacific at HSBC Global Asset Management, said.
"[On the other hand,] consumer durables and financials that are cyclical-related are very cheap. If you think the economy is not about to tumble - which we believe - then these cyclicals are of great value and this partly explains why some countries are looking more attractive due to the mix of cyclical and defensive stocks," he added.
As such, HSBC prefers South Korea, Hong Kong and Taiwan markets where there are more cyclical plays. By contrast, Southeast Asian markets such as Thailand, Malaysia and Singapore look "quite expensive" due to a higher number of defensive stocks, Maldonado told CNBC.
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