The firm's Asia investment team looks for companies burdened by an issue that is dragging down the share price. The issue could be supply and demand, regulations or something company specific, Rae explained.
"There are lots of reasons why a company has an issue and the market almost always exaggerates this. The challenge is finding this type of investment and then determining whether it can grow. Does it have recovery potential or is the issue something structural that will drag it down over the longterm?
"It's an unusual investing style in Asia, but it works well because most people aren't doing it. They're off hunting hot stocks, looking for the next Tencent or Baidu."
On the opposite side
Investor behaviour in Asia has created some big imbalances that the investment team takes advantage of, Rae said.
"The last five years have been worrying - with equities slowing, new leadership in key markets, a military coup in Thailand - which is why fixed income has done so well.
"Risk aversion has driven investors to buy safe blue chip and high yield stocks. Those quality stocks are also real expensive today. The most profitable companies have a huge premium."
On the other hand, financial, real estate and technology stocks across Asia tend to be cheap, he said.
AB has a similar contrarian take on India.
"In India, the case for technology and healthcare has always been there, said Rajeev Eyunni, director of research.
"Instead, we look at stocks that are cheap and have growth potential. There is a valuation gap and domestic cyclicals are very cheap. The economy has bottomed and these cheap stocks will recover with the economy."
Southeast Asia is expensive versus the region and versus its own history in every sector, he said.
Thus, AB has no exposure in Singapore, Malaysia and the Philippines and small exposure in Indonesia and Thailand.
Besides being way underweight Southeast Asia, the firm is long China and in terms of companies, long on cyclical plays and underweight traditional defensives.
The great wall of retail capital
China is not as cheap as last year, but it is cheaper than world equity markets and cheaper against its own history, said John Lin, senior research analyst and portfolio manager for China.
A-share performance drove the mainland markets in 2014, but it was not due to the anticipation of global investors coming in.
"It wasn't the stock connect driving the offshore market. What's happening in the A-share space is the retail investor or average Chinese citizen is once again looking at the Asian market differently.
"A wall of retail money is going into A-shares. It's a domestic wealth reallocation story."
Lin believes common investor concerns about lack of transparency in China are overstated. Chinese market disclosures are among the best in emerging markets, and quarterly reporting for China-listed companies is more onerous than in Hong Kong, he said.
"Of the corporate scandals that have happened in China, very few are in the A-share market because disclosure and regulatory requirements are very stringent.
A large portion of China's listed companies are state-owned enterprises.
"In the current anti-corruption environment it is not logical for SOE managers to do shenanigans with quarterly reports," Lin said.
"If they are found out, the result is asymmetric. If you do something wrong, you will go to jail. If you do something wrong and don't get found out, the profits accrue to the state, so what's the motivation?
"We don't find corporate disclosure to be a problem in China."