S. Korea topples China as investors' favorite: Poll

S. Korea topples China as investors' favorite: Poll

Reuters
Hong Kong

South Korea will topple China as fund managers' favorite Asian
market by early next year, with Australia and India creeping onto
investors' radar screens.

South Korea was the top pick by 33.3 percent of fund managers
polled from both a three-month and one-year perspective in the
latest quarterly funds survey by Reuters and Hong Kong-based fund
management magazine, Benchmark.

China, the fund managers' long-held favorite, was relegated to
second place with 22.2 percent and 11.1 percent of respondents
choosing it over three and 12 months respectively.

But China was also rejected by 11.1 percent as the least-loved
investment destination over three months -- the first time this
year the economy was featured on the list of least-loved markets.

Some fund managers have cut their weightings on overvalued
Chinese stocks after a huge rally in the early part of the year.

The poll of nine international fund management houses forecast
South Korea, China and Hong Kong as likely to emerge as the top
three Asian markets in the next 12 months.

Taiwan fell out of favor with 33.3 percent and 22.2 percent of
respondents rejecting it over three and twelve months.

Elsewhere in the region, Australia and India gained investor
confidence after being shunned in previous polls.

Australia was chosen by 11.1 percent of respondents who see
the market as a safe haven for investments against rising global
risks over the next one year.

India was favored by 5.6 percent of respondents after the
lifting of economic sanctions by the U.S. imposed since 1998 in
return for New Delhi's support to Washington in its war against
Afghanistan.

Fund managers cited increased risks after the Sept. 11 attacks
as the biggest threat to investment performance over the next
three- and 12-month horizons.

"The major risk now is how U.S. retaliation efforts against
the terrorist attacks will evolve and the resulting impact on
economic growth," JF Asset Management said in the survey.

Fears over a protracted U.S. economic downturn prevailed with
19.5 percent of all respondents naming it the biggest risk in the
coming year.

Events related to the Sept. 11 attacks spurred risk aversion
among money managers, with 44.4 percent going overweight on
defensive and healthcare stocks over the next three months.

The abrupt global economic downturn after the attacks
reinforced investors' loss of faith in technology, with 22.2
percent of fund managers going underweight on the sector over the
next three- and 12 months.

Bonds and cash were chosen by 22.2 percent and 11.1 percent of
portfolio managers as the assets to hold over the next three
months given volatile global stockmarkets.

But equities remained as most fund managers' best bet over the
coming year with 88.9 percent expecting them to outperform.

Europe was the most-preferred destination for funds outside
Asia, with 33.3 percent of money managers choosing to invest in
the continent over the next 12 months.

The U.S. stock market, the world's largest, found favor with
27.8 percent of asset managers with a one-year horizon.

By contrast, Argentina was the least loved of all non-Asian
markets, with 22.2 percent of fund managers rejecting it over a
three-month and one-year horizon.

Nagging doubts over Argentina's ability to restructure its
massive debts have cast a shadow over emerging market assets.