Asian investors looking for better year<\/p>\n
HONG KONG (AFP): Long-suffering Asian share investors may
\nfinally find something to smile about in 2001 although the year
\ncould get off to a rocky start, analysts said.<\/p>\n
Most Asian investors will be glad to see the back of 2000.
\nWith the region growing strong after the Asian financial crisis
\nof 1997 and 1998 they expected better.<\/p>\n
Except for Australia and the world's top performing Shanghai B
\nshare market, major bourses in the region tumbled anywhere
\nbetween 10 and 50 percent in 2000 at a time of strong economic
\ngrowth.<\/p>\n
But the economic growth had been more than factored in during
\n1999's rally. This year the bursting of the tech stock bubble,
\nrising US interest rates and a souring Wall Street, as well as a
\nhost of domestic factors, all conspired to sink Asian shares.<\/p>\n
Looking ahead, the dimmer prospects for IT companies show no
\nsign of a speedy turnaround, Japan's economic recovery is as
\ntenuous as ever and the debate over whether the US is headed for
\na soft or hard economic landing continues. So what gives Asian
\nmarkets hope for a better year in 2001?<\/p>\n
Interest rates are the major reason. Lower US interest rates
\n-- expected early in 2001 -- offer hope of a better performance
\nby Wall Street and indirectly for Asian markets.<\/p>\n
Furthermore, most market watchers are expecting a soft landing
\nfor the US economy, which should ensure continued growth --
\nalbeit at a slower rate -- for Asian economies.<\/p>\n
ING Barings is predicting a 24 percent return from Asia
\nmarkets in 2001, led by returns of 36.4 percent in South Korea
\nand 36.3 percent in Taiwan, two of the most depressed market this
\nyear.<\/p>\n
"Asian markets will reward investors with high double digit
\nreturns in 2001, as markets respond positively to a drop in US
\ninterest rates, and regional growth expands," ING Barings chief
\nstratagist for Asia Markus Rosgen said.<\/p>\n
"We have to keep watching prices on Wall Street next year but
\nmoves are likely to be moderate on expectations that the US
\neconomy will achieve a soft landing," Nikko Securities senior
\nmarket analyst in Tokyo Hiroichi Nishi said.<\/p>\n
"Share prices are expected to trade in a limited range early
\nnext year but chances are high that the Tokyo stock market could
\nenjoy some recovery towards the end of next year," he said.<\/p>\n
Hong Kong sank more than 10 percent this year but 2001 will be
\na different story, according to OCBC Securities director Peter
\nLai, who sees the index testing the 18,000 level in the first
\nquarter.<\/p>\n
Salomon Smith Barney is not quite so bullish but sees the Hang
\nSeng hitting 17,500 within 12 months.<\/p>\n
Lai cited US interest rate cuts of between quarter and a half
\npercentage point and China's entry into the World Trade
\nOrganization as factors that would propel Hong Kong stocks.<\/p>\n
Australian shares stood out for holding their ground in 2000
\nbut nevertheless, some gains in the New Year are likely, Merrill
\nLynch Australasia research head Michael Brown said.<\/p>\n
"We could see a strong rally in the market if investors think
\nthe Fed might ease sooner rather than later, or if they agree
\nwith our view that the drivers of top-line (revenue) growth and
\nthe structure of corporate profits remain healthy," he said.<\/p>\n
Another important regional market, Singapore, could also be
\npoised for a rebound, partly because it stands out for its record
\nof economic and corporate restructuring, an analyst at a regional
\nbrokerage said.<\/p>\n
South Korean shares plummeted about 50 percent this year but
\nnot all share ING Barings' optimism for the coming year.<\/p>\n
"Prospects for 2001 are dim as South Korea's economic growth
\nis forecast to slow further. There will be a technical rebound
\nbut even this depends on the process of economic reforms," said
\nShin Yong-Kyu of Daeshin Securities.<\/p>\n
Constipated banking systems remain a central problem in many
\nregional countries, especially Thailand, South Korea and
\nIndonesia where mountains of bad loans are holding up a full
\nreturn to health.<\/p>\n
"Unless the non-performing loans are proactively attacked, the
\nbanking sector will not lend and no one will invest in banks or
\nany other companies as firms won't be able to raise capital,"
\nTurn Key Management managing director Scott Niven said of the
\nBangkok market.<\/p>\n
Thailand also has to go through the uncertainty of a general
\nelection in January.<\/p>\n
Political turmoil in Indonesia shows no sign of settling down
\nearly in the new year, although the lessening of pressure on the
\nrupiah as the US dollar's strength wanes offers a glimmer of
\nhope, dealers said.<\/p>\n
Recent moves to slash transaction costs for Shanghai B-shares
\nand to set up an electronic trading system should help to ensure
\nfurther gains for this years stellar performer -- share prices
\nmore than doubled in 2000 -- dealers said.<\/p>",
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