Asian stocks to recover in second half: CSFB

Dow Jones, Hong Kong

Asian equity markets are expected to recover sharply in the second half of 2002 on the back of this year's aggressive monetary easing, fiscal stimuli and excess domestic liquidity, a regional economist said Wednesday.

Dong Tao, chief regional economist at Credit Suisse First Boston, or CSFB, said Asian equity markets will likely post "robust growth" even without a V-shaped or sharp recovery in the U.S. next year.

"Asia entered into a slump much earlier than the rest of the world. It won't take much to see a strong rebound," Tao said in a news briefing.

CSFB's prediction is based on an assumption that the global war on terrorism won't extend beyond the first quarter of 2002 and oil prices won't rise sharply.

If one of these two considerations aren't met, Tao expects to reexamine his outlook for Asian markets.

CSFB expects weaker global demand for oil and efforts by the Organization of Petroleum Countries to maintain a steady supply, will keep oil prices in check. The company estimates average oil prices of US$28 a barrel this year and $21-$22 a barrel in 2002.

"Most Asian economies are sensitive to oil prices and current account balances would be adversely affected should oil prices rise much higher than our assumption," Tao said.

Within Asia, India is considered the most oil-price sensitive with oil imports making up around 27 percent of total imports, CSFB said. Other oil price-sensitive countries, whose oil imports make up more than 10 percent of total imports, are Taiwan, South Korea, Philippines, and Japan. Hong Kong and Singapore are the least dependent on oil imports, CSFB said.