Merill Lynch upbeat on Asia

Merill Lynch upbeat on Asia

KUALA LUMPUR (AFP): Asian stock markets are likely to perform
better in 1995, international brokerage Merrill Lynch predicted
yesterday, saying that after China and India, Indonesia could
emerge as the next favorite.

Uncertainty in global and other Asian markets could also
benefit Singapore, which is likely to gain from broad-based
earnings growth in banking, ship-repair, airlines, hotels, office
property and retail next year, it said.

The forecast was done against a projected growth of 7.0-to-7.5
percent for the 10 major Asian economies, not counting Japan, in
1995 and 1996, from 7.7 percent in 1994.

Merrill Lynch said in its Asian economics strategy report
released at a national economic outlook conference that slower
growth in China's economy should be offset by continuing buoyant
expansion in Southeast Asia.

"If investment flows are any indication, Indonesia could well
emerge the region's strongest economy in 1995," it predicted.

For its 1995 Asian market strategy, Merrill Lynch has rated as
positive Singapore, Malaysia, Indonesia and Thailand, negative
for Hong Kong and Taiwan and neutral for South Korea and the
Philippines.

In the next 12-to-18 months, property-related earnings should
do well in Malaysia, while financial sector liberalization could
provide a third engine of growth for Singapore's economy, Merrill
Lynch said.

In South Korea, margin expansion should see continuing strong
earnings growth next year, while India's structural reforms are
expected to start yielding tangible growth.

In terms of economic fundamentals, it rated as above average
the markets of Singapore, Malaysia and Thailand, average for
India, Indonesia, South Korea, the Philippines, but a below
average for Hong Kong and Taiwan.

Merrill Lynch said property prices were a major unknown in
Hong Kong, and earnings were slowing in at least two sectors:
banking and property development.

"The run-up to 1997 could produce more political wranglings
with Beijing," it said.

For Taiwan, it noted that although a breakthrough in mainland
China policies could act as a key market catalyst in 1995, growth
prospects would remain unexciting in the near term.

But the downside risks could include a sharper-than-expected
rise in U.S. interest rates, it said.