Asia - Out of the woods?

Having weathered bleak conditions during the regional crisis in 1997, most managers think that Asia is now better equipped to deal with the current bear market than some of its major counterparts, including the US.

Managers have found solace in several regional markets making positive returns over the 12 months to September 1, 2002.

According to ratings agency Standard & Poor’s, most notable is Korea, up 43.6% in US$ terms and Thailand (+12.5%) which, when measured by the MSCI AC Far East (ex-Japan) index, rose 9% outpacing the US (-18%) and Europe (-15.2%).

“But the region’s overall performance disguises continuing declines and meagre returns in many of its markets such as the interest rates sensitive economies of Hong Kong and Singapore, which fell 9.4% and 8.5% respectively, making even a positive return for investors difficult to achieve,” says S&P.

S&P’s conclusion is that some short-term volatility, along with fears of a double-dip recession in the US and potential conflict with Iraq factored in investment strategies, means that talk of Asia decoupling from major economies is still premature.

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