The world is facing many challenges, including climate change, economic inequality, and unsustainable production and consumption, according to abrdn.
“These issues are really important for us as investors, because we’re looking to allocate our capital for the long term and making sure that we’re not exposed to unnecessary risk,” said Amanda Young, chief sustainability officer at the asset manager, at a media briefing.
“We need to make sure that the companies that we’re investing in are managing these externalities effectively.”
However, these issues not only pose challenges, but they also offer investment opportunities in the region.
In Asia, energy transition and the need to evolve energy capacity requires infrastructure investment, research, and development.
In particular, abrdn believes investors should think about thematic investing rather than focusing on a specific sector.
“When looking at energy transition in the power generation sector, there are investment opportunities from private manufacturers, solar modules manufacturers and companies that operate power generation capacitors,” said David Smith, senior investment director, Asian equities.
“There are also opportunities around electricity transmission and around upgrading grids to allow for the greater penetration,” Smith added.
The second big challenge across the region is access to financial services, including housing loans and affordable insurance, according to the asset manager.
“While we have improved the economic wealth of nations, particularly in Apac, the gap between those who have a lot, and those who don’t have very much, has grown exponentially,” said Young.
When addressing the equality gap, abrdn believes investors should look into the healthcare sector.
Apart from basic health care services meeting basic day-to-day needs, there may also be opportunities in the innovative health care sector that develop new products and treatments to address modern wellbeing challenges, including diabetes, cardiovascular disease and cancer, said Smith.