U.S. funds to seek Asian stocks, says J.P. Morgan
U.S. funds to seek Asian stocks, says J.P. Morgan
BANGKOK (Reuter): The much-awaited movement of U.S. funds to
Asian bourses, as Wall Street's gains approach saturation point,
may take place from the second half of 1996, a senior J.P. Morgan
& Co Inc official said yesterday.
Among regional markets likely to benefit from such investment
would be mainly those in Thailand, Malaysia and to a lesser
extent in Indonesia and the Philippines, Ronald Dewhurst, the
firm's managing director for Asia-Pacific equities business told
Reuters in an interview.
"We could see some rotation of funds from the U.S. to Asia in
the second half of this year. We are in a delicate stage now," he
said.
Dewhurst noted that after the recent sustained upside in Wall
Street, some U.S. investors were concerned that the market could
correct, and were gauging bourses in Asia where they could
diversify their investments to make good returns.
There was a brief spurt of American money into some Asian
bourses last November and December, but that movement had abated
for now, he said.
Recent China-Taiwan tension had made some U.S. investors
cautious about dispatching fresh funds to emerging Asian markets.
"There is a perception problem," he added.
Dewhurst said the tension had not sparked a big sell-off or
repatriation of U.S. funds in some key Asian markets, but
resulted in some profit-taking and investor inactivity.
J.P. Morgan manages a total of some US$180 billion in investor
funds globally in a variety of financial sectors, Dewhurst said.
On the Thai stock market, he said it was one of the most
attractive emerging markets in Asia and could be a major
beneficiary of any rotation of U.S. funds in the future.
"Thailand stacks up attractively and I see it as a potential
beneficiary of rotation by funds from the United States," he
added.
Dewhurst said Thailand was not without problems because the
country's widening current account deficit was a hot topic among
foreign analysts.
In 1995, Thailand's current account deficit was 8.1 percent of
gross domestic product and 42.0 billion baht higher than the
central bank's projection of 335.7 billion baht. In 1994 the
deficit was 203.3 billion baht.
Dewhurst said he was not unduly worried about the deficit.
"Certain economic figures become the flavor of the day. The
current account deficit is now the flavor. This country has made
big advances in the past four to five years," he added.
On Malaysia, he said the Kuala Lumpur Stock Exchange was not
that cheap to invest in, but like Thailand offered reasonably
good volume and opportunities to make profits.
Markets in Indonesia and the Philippines offered good
prospects for returns but they were small volume bourses and both
lacked big market capitalization.
While the Tokyo bourses were sluggish, the Hong Kong market
may not be a big recipient of U.S. funds as it was driven mainly
by property and sentiment may be softened by the handover of the
British colony to China in 1997, he said.
Dewhurst identified stocks in companies producing consumer
goods, banks and financial institutions, some property firms and
the resources and power generation sectors as good investment
bets in emerging Asian markets.
He said too much had been banked on the Asian
telecommunications sector in which there were too many players in
the field busy raising capital, but also stiff competition.
"Clearly with strong GDP growth in Asian countries and
increased consumer spending, consumer product makers would be
beneficiaries of investment," he added.
"The sleeping sector, as I call it, are the power generation,
oil exploration and resources sector. They are a part of an end-
product. We will see big companies developing in this area in
Asia," he said.