Asian stocks seen outperforming after another `annus horribilis'<\/p>\n
David Vujanovic, Agence France-Presse, Hong Kong<\/p>\n
Asian bourses had another grim year in 2002, emulating global
\nstock markets amid the economic downturn, but the region is
\nexpected to outshine the rest of the world next year despite
\nuncertainty.<\/p>\n
Analysts were hoping for an upturn in Asian share prices this
\ntime last year after the U.S.-led global slowdown in 2001
\nfollowed by the shockwaves of the Sept. 11 terrorist attacks on
\nNew York and Washington.<\/p>\n
But the recovery failed to materialize due to the weak U.S.
\neconomic upturn as well as concerns about a possible double-dip
\nrecession for the world's biggest economy.<\/p>\n
That was exacerbated by U.S. corporate scandals and oil prices
\nshooting up ahead of an expected U.S.-Iraq war towards the end of
\nthe year.<\/p>\n
Stock markets tumbled as Asia's crucial export sector
\nstruggled amid sluggish consumer spending in the U.S., its
\nbiggest export destination.<\/p>\n
The region's biggest market, Tokyo, hit a series of 19-year
\nlows and other major bourses in Hong Kong, Singapore and Taipei
\nshed 16-18 percent. However, some of the smaller Southeast Asian
\nmarkets surprisingly flourished amid the gloom.<\/p>\n
With the U.S. economy expected to pick up next year, exporters
\nstand to gain from stronger orders. The U.S. economy is projected
\nto grow 2.6 percent in 2003 from 2.4 percent this year.<\/p>\n
The mix of a U.S. turnaround and a fast growing China are seen
\nas the right ingredients to bolster regional economies, although
\nJapan shows little sign of emerging from its decade-long slumber.<\/p>\n
\"The year to 2002 proved to be another annus horribilis for
\nequity markets and a tough 12 months lie ahead, yet as a region
\nAsia is set to outperform and come end of 2003, Asia should trade
\nhigher on the back of a clearer global picture,\" said Markus
\nRosgen, ING Financial Markets' chief strategist for the region.<\/p>\n
Japanese share prices hit a series of 19-year lows in the
\nsecond half of the year because of major problems with the
\ncountry's economy, as well as the global stock market downturn.<\/p>\n
The Japanese economy continues to be crippled by deflation,
\nalong with the large number of bad loans at banks whose plunging
\nshare prices pulled down the rest of the market.<\/p>\n
The key Nikkei-225 index lost about 20 percent after shedding
\nalmost 24 percent last year. On November 14 it ended at 8,303.39,
\nits lowest close since March 25, 1983.<\/p>\n
Hong Kong stocks were also hit by economic weakness and
\ndeflation. The Hang Seng index fell about 16 percent after
\ndropping more than 24 percent in 2002.<\/p>\n
\"In the early part of the year, it was hoped that lower
\ninterest rates and an economic recovery could help the market,\"
\nsaid Kenny Tang, associate director of Tung Tai securities.<\/p>\n
\"However, the economy did not recover and deflation remained
\nand so for the whole year, the Hang Seng continued on a
\ndowntrend.\"<\/p>\n
Seoul and Bombay held firm but Sydney and Wellington could not
\nmatch their steady 2002 performance, losing about 10 and six
\npercent respectively.<\/p>\n
The success stories of the year were limited to Southeast Asia
\nwith Bangkok climbing about 15 percent, and Kuala Lumpur and
\nJakarta both up about eight percent.<\/p>\n
Looking ahead, ING Financial Markets said in a recent report
\nthat it sees even further upside for the three Southeast Asian
\nbourses in 2003.<\/p>\n
For the region as a whole, Howard Gorges, vice chairman of
\nSouth China Brokerage, said the threat of a U.S.-Iraq war was
\nstill hanging over markets.<\/p>\n
\"Markets are more or less discounting war in the short term
\nbut I don't think they are discounting a long delay in sorting
\nout the Iraq problem.\"<\/p>\n
But despite the uncertainties, Lim Chung Chun, executive
\nchairman of Fundsupermart.com in Singapore, said Asian stocks now
\noffer better value than their U.S. and European counterparts.<\/p>\n
According to Lim, Asia's important technology-related stocks
\nhave hit a trough and are poised to bounce back next year, albeit
\ngradually.<\/p>",
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