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Investors Optimistic About Asian Equity in 2011

Mar. 29 – More than 2,000 investors and 270 corporations voted on their expectations for Asian equities in 2011 at the 14th Asian Investment Conference held by the Switzerland-based multinational financial service company Credit Suisse last week. After defining opportunities and possible risks in different regions, most of them are bullish and expect the market to have a stable or strong performance.

China to lead the gains
While 46 percent of attendees show a strong confidence in Asia’s stock market, predicting a 10 percent to 20 percent rise in the MSCI Asia Excluding Japan Index, the Chinese market seems to have attracted the most investor interest. Roughly 17 percent of voters predicted the Hong Kong-listed H Shares to do the best, while 20 percent think China’s domestic A-shares will be the strongest performer.

Global inflation, coupled with the turmoil in the Middle East and North Africa which is causing oil prices to surge, stood out to become the major concern of investors, but some believe China’s inflation is going to wane in the second half of the year. Jahanzeb Naseer, Credit Suisse’s Hong Kong-based product manager for Asian research, told Bloomberg on March 25 the government’s tightening policies will not lead to significant slow-down in China’s economic growth, predicting the country to grow “in about the 9 percent range.”

Hao Kang, portfolio manager of ICBC Credit Suisse Asset Management Co., a venture between the largest Chinese bank and Switzerland’s second-largest lender, said yesterday that he is optimistic on China’s stock market because the equity prices are not expensive and China’s tightening policies are seeing an end.

China’s inflation rate slowed down at 4.9 percent, compared to November’s two-year high of 5.1 percent. The Shanghai Composite Index stood out as the strongest performer among Asia’s major equity markets, increasing by 6.8 percent this quarter.

Japan and India may become the region’s worst performers
Some 19 percent of attendees predicted the earthquake and tsunami-hit Japanese market to be the worst performer of the year, although the disaster itself is only 9 percent of voters’ major concern.

While Japan’s progress to stabilize the country’s crippled nuclear reactors is sending positive signals to the market, where the MSCI gauge climbed by 4.4 percent last week, investors are still worried about the overly low Japanese yen that might add pressure to further appreciation. A strengthening yen will have a negative impact on the country’s economics.

India was voted by most investors (26 percent) to become the worst performer in the market, mostly due to the high domestic inflation rate and strong speculation of continuing interest rate hikes.

Energy to become the most popular sector
Although the recent oil price surge did bring bad news to global inflation control, it also brought more profit to businesses in the energy sector and thus good news to energy stocks too. Around 35 percent of investors believe energy is the sector that is the most worthy of investment this year.

In addition to energy, investors also placed much interest on consumer stocks, thanks to the ever-increasing consumption power in Asia’s emerging markets.

Surprisingly, investors did not give much credit to the performance of telecom services and utilities, the two industries that usually boasts considerable stability. A surprising 42 percent of attendees believe the two sectors will be the worst performer of the year.

Related Reading

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Mirae’s New India-China Fund Targets Consumption-led Sector

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