The regional strategy team at Merrill Lynch has rejigged the weighting of its Asia-Pacific ex-Japan asset allocation, increasing exposure to Australia at the expense of South Korea and Malaysia.
The financial services company, which has A$1 trillion of assets under management, has added global packaging company Amcor Ltd. and National Australia Bank Ltd. , albeit underweight compared with the banking sector, to its portfolio of 27 companies across Asia.
Of those companies, seven are Australian, giving the country 39.5% of Merrill LynchÂ's asset allocation. The other companies are Tabcorp Holdings Ltd., Goodman Fielder, Woolworths Ltd., QBE Insurance Group Ltd. and Westfield Holdings Ltd.
'The regional equity strategy team has been feeling somewhat less comfortable with its underweight position in Australia given that the earnings cycle has begun to roll over,' Merrill Lynch told clients. 'We were also running a very underweight position against the banking sector across the region, (and) as a result, NAB is now brought into the latest model portfolio,' it said.
Elsewhere in the region, Merrill Lynch has reduced its overweight position in South Korea and Malaysia, although both still have overweight asset allocations with portfolio weightings of 18% and 5%, respectively.
Other countries in the region are weighted as follows: Hong Kong 10%, Taiwan 8, China 6.5%, Singapore 6%, India 4% and Thailand 3%.
(source: Dow Jones)