Schroders flags Asian winners from oil price fall

As Crude Oil falls below $26.5 a barrel and Chinese growth stalls, Schroders picks the likely winners in Asia.
By None

The continued slump in oil prices which triggered a widespread sell-off of energy stocks, could yet benefit a handful of Asian countries, according to Schroders.

The sentiment came after WTI Crude Oil fell to $26.5 a barrel on Wednesday – meaning it has dropped by almost a third since the start of the year. 

The asset manager’s head of fixed income for the region said that while investors are worried about how tumbling oil prices will impact emerging markets, there are isolated countries in the region who will benefit.

In the company’s latest investor update, Rajeev De Mello, head of Asian Fixed Income at Schroders, said the largest consumers of oil in the region will be the winners from the economic trend.

He explained: “[Some] Asian countries consume a lot of oil and import a large part of their energy requirements, so are the first beneficiaries of the fall in prices. Countries like India, Thailand and South Korea are all big beneficiaries.

“Inflationary rates have dropped which is positive because Central Banks can cut interest rates.  Their fiscal spending drops as well because of the subsidies for agriculture, fertiliser and oil-based products.”

The asset manager‘s cheerful take on market movements comes a day after the International Monetary Fund reported that the Chinese economy had grown at its slowest rate for 20 years in 2015.