RI, Thai to lead Asian upturn: Mobius

RI, Thai to lead Asian upturn: Mobius

HONG KONG (Reuters): Indonesia and Thailand will lead the recovery of Asian stock markets spurred by domestic demand and the region's increasing exports to China, Templeton Emerging Markets Fund said on Thursday.

"We expect the recovery to come in the middle of next year. At the top, Indonesia and Thailand have the greatest potential for big increases," fund president Mark Mobius told a news conference.

Thailand's benchmark SET index has gained 23.47 percent so far this year. Jakarta's JSX has risen more than four percent.

Mobius said the installation of Megawati Soekarnoputri as Indonesia's president and the signing of a new set of economic reforms agreed between the IMF and Jakarta have restored the confidence of foreign investors.

He said recent reports of Indonesia pushing ahead with a planned 51 percent divestment in state-run PT Semen Gresik, the nation's largest cement maker, to Mexican giant Cemex will encourage investors to look towards Jakarta.

"The stimulus in Indonesia is also to come from domestic demand," Mobius said.

Templeton Asian Development Equity Fund, which manages funds worth $20 million, had as at end-July four percent of its holdings in state-run telephone operator PT Telekomunikasi Indonesia and another two percent in Indosat

Rising home and car sales in Thailand were signs of strengthening domestic demand, Templeton said.

Mobius said Thailand's state-owned banks would benefit from the creation of the Thai Asset Management Corp and help in clearing bad loans from the banking system.

But Mobius was less charitable towards Malaysia.

"We see some recovery, some changes with regards to reform, but we are still worried about the crony capitalism which may still be in play," he said.

Malaysian markets have gained strength in recent weeks on hopes reforms in the corporate sector will continue.

"We will like to see more reform before we become enthusiastic. That's really the only thing that's holding it up," the president of the fund said.

"These (Asian) markets have really bombed out... It's really bargain hunting time. There is a good opportunity here and we don't see why we shouldn't start now," Mobius said.

Templeton said it expected Hong Kong's equity market to slowly dislocate from U.S. benchmark indices.

"Hong Kong will begin to separate from the U.S. mainly because of what's happening in China. Because of a pick-up in China, Hong Kong will begin to move up with that," Mobius said.

Templeton forecast Hong Kong's economy to expand by between one and two percent in 2001.

Hong's Kong's Cheung Kong, a flagship of tycoon Li Ka-shing, occupied the top slot in Templeton's ADEF with five percent of the holdings invested in the property firm.

Templeton expected China's economy to grow by seven percent during the current year but said the country's hard curency B- shares were currently expensive.