Investors Will Shift To Asian Stks;Should Target Tech

Investors Will Shift To Asian Stks;Should Target Tech

Dow Jones
Hong Kong

A U.S.-led global recovery will prompt investors to return to
Asian equities this year and as they do, they should look at
growth and cyclical stocks, especially in the technology sector,
ING Barings said in its outlook for 2002.

The investment bank is projecting that the "worst is now over"
for Asian equity markets and believes that investors will see
positive returns on their investments this year.

According to Markus Roesgen, Asian strategist with ING
Barings, there is plenty of liquidity around to support a return
to the stock markets and low interest rates will serve as an
incentive for retail investors to do that.

In Hong Kong, Singapore and Thailand, more that 70 percent of
the companies covered by ING Barings pay a higher dividend yield
than the local savings rates, Roesgen noted. In South Korea and
Taiwan the rate is close to 40 percent.

In many cases "you are better off buying the bank than saving
with the bank," he said.

Valuations in Asia are also cheaper now than they have been in
23 out of the past 26 years and lower than anywhere else in the
world except Japan.

Meanwhile, the recovery in global stock markets in the fourth
quarter will contribute to a renewed interest in stocks, Roesgen
said, noting "greed" as one driver of investment decisions.

"Clearly you don't want to see your next-door neighbor become
a millionaire when you still have your money in the bank (with
very low interest)," he said.

And while unemployment rates may still be trending towards
their peak in some Asian countries, the rate of the increase will
be slowing down.

This will affect consumers' interpretation of the situation as
the probability of them becoming unemployed declines, Roesgen
said.

According to ING Barings, technology offers the highest growth
potential.

Even if the sector only returns to its 10-year average rate of
return on equity, the upside is 145 percent from current levels,
he said, adding that most sectors are expected to return to their
10-year average as the global economy recovers.

This would also leave 52 percent growth potential for
conglomerates and 42 percent for consumer cyclicals.

One sector, which looks good from this perspective, but isn't
according to Roesgen, is telecoms.

The 10-year average is high for this sector due to very high
returns on equity in the early 1990s when it was a regulated
market, he explained.

In fact, the telecom sector is ING Barings' biggest
underweight sector for 2002 due to expectations of share price
volatility, continued weak global sentiment for the sector and
uncertainty about key regulator decisions in Asia.