ASIA - Investors looking for cheap, liquid growth assets should turn to Asia.
Markets such as Korea, Hong Kong, China, Malaysia and Taiwan, where good quality and profitable cyclical and/or growth assets are available, should continue to do well over the next twelve months, according to Baring Asset Management.
Khiem Do, BAM’s fund manager for Asia Growth, said: “We predict a continuation of strong economic growth, between +5 and +5.5 per cent.
“Following a strong year of corporate earnings growth in 2002, we expect a gain of 18 per cent this year. This, together with a continuation of low interest rates and abundant excess liquidity, augurs well for Asian equity markets.”
Strong growth in Asia is boosted by several of global reflationary developments, explains Do. Central banks in major economies, such as the US and Europe, are expected to continue to cut interest rates. And governments in Japan, the US and many in Asia, are planning to increase spending or cut tax rates.
“These measures enhance the prospects of a modest global economic growth scenario and, in turn, kill ‘double dip’, deflationary fears. This is very good news for Asian markets, which have been unduly de-rated last year,” he added. Improvements in corporate governance are also expected to continue, with bad debt problems in the Korean, Taiwanese and emerging ASEAN (Association of South East Asian Nations) banking systems to continue their work-out.
BAM is bullish on Korea, Hong Kong, China and Singapore for the medium term and recommends a portfolio mix of defensive growth and well-managed, globally competitive cyclical stocks.
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