Salomons sees mixed Asia equities earnings growth
Salomons sees mixed Asia equities earnings growth
SINGAPORE (Reuter): Salomon Brothers said yesterday that the
earnings growth outlook in 1996 in equity markets in southeast
Asia and parts of Asia differs significantly for each market.
But most markets are expected to post strong earnings growth
next year, it said in a report.
"Growth in Hong Kong is low in absolute terms but momentum
should improve as 1996 unfolds," it said.
Singapore should post growth in the mid-teens in 1996 but
initial forecasts for 1997 point to a decline to the low teens.
On Malaysia, it said earnings growth should decelerate to low
absolute levels in the next two years.
"After a slow year in 1995, earnings momentum in Thailand
should improve in 1996 and strong absolute growth rates look
achievable," it said.
Indonesia, it said, should post further rapid earnings
increases the next two years. "Earnings estimates in the
Philippines also point to strong growth, but we expect some
downward adjustment to estimates in response to higher rates and
recent natural disasters," Salomon Brothers said.
It said earnings growth in Korea is slowing but absolute
levels should remain high. Taiwan profits should slow next year
and then rebound in 1997, it said.
Salomon Brothers also said it expects tight monetary
conditions in most of the ASEAN (Association of Southeast Asian
Nations) economies during the first half of 1996.
It said in a research report that this is a consequence of the
external imbalances and inflationary pressures that have garnered
attention recently.
ASEAN groups Brunei, Indonesia, Malaysia, the Philippines,
Singapore, Thailand and new member Vietnam.
"We still believe short-term rates will ease downwards later
in the year as current account deficits begin to reduce, but
further upward rate pressure is likely in the near term," Salomon
Brothers said.
In contrast, rates in Korea and Taiwan were likely to fall
because of different inflation and current account conditions
and, in Taiwan's case, very low money supply growth.
"Hong Kong's rates should echo those in the United States,
where we continue to expect Fed easing," it said.
Meanwhile, Paul O'Donnell, director of Bankers Trust (BT) Fund
Managers, said in Hong Kong yesterday that Asian equity markets
have been volatile recently, but the overall outlook is
positive.
"We have had a couple of years of the doldrums, but I think
this is coming to a close. If there is a time to get in, it
probably is right now," said O'Donnell.
"While there has been overheating in some economies,
particularly Malaysia, Thailand, Indonesia and the Philippines,
where strong investment is causing current account deficits to
blow out, the respective governments have taken measures to
address these concerns," said O'Donnell.