Asian stocks set to benefit as China powers ahead A combination of high earnings, easy availability of cash, a weak dol-lar and relatively inexpensive share prices all suggest that the year ahead will be a good one for stock markets across Asia.
Although 2011 could be marked by big swings in GDP growth – with some economies slowing down considerably from double-digit growth in the past couple of years as the global economy normalizes – investors believe equities are set to perform well in most countries across Asia.
For most investors, China A shares are the top pick, followed but H-shares in Hong Kong and then shares in other markets in the region, says Francis Cheung, CLSA’s head of China-Hong Kong strategy. The huge economies of China and India, the more sophisticated Hong Kong and Singapore, productive Taiwan and South Korea and the rapidly growing Indonesia, Malaysia, Philippines and Thailand are all poised for significant growth in 2011.
Even Vietnam, which has a tiny and unsophisticated stock market, is set to rebound after sharp drops. Japan, long mired in reces- sion, saw four straight quarters of growth even as the country battles deflation, according to Deloitte, a global accounting firm and con- sultancy. As a whole, investment bank Credit Suisse expects economic growth in the region (excluding Japan) to average 7.6 percent through 2011.
At the same time, the MSCI Asia ex-Japan Index of regional stocks could grow by 21 percent or more through 2011, said Joseph Tan, Asian chief economist at Credit Suisse Private Bank in a late November research note. The index more than doubled between January 2009 and January 2011. Since early 2009, global markets have been in recovery mode. Most rebounded sharply in 2009 after the historic drops in 2008 that marked the global financial crisis.
The best performing of these markets was Thailand.
The recovery continued through 2010 but at a slower pace, according to MSCI Inc, which produces indices around the world including the MSCI Asia ex-Japan. In 2010, equities markets in developed economies grew 9.2 per- cent compared with 27 percent in 2009, held back by Europe. Growth in emerging equities markets also slowed down from 74.5 percent in 2009 to a relatively low 13.8 per- cent in 2010. The best performing of these markets was Thailand.
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