Economic activity in the Pacific region has started to accelerate rapidly ahead of an expected recov...
Economic activity in the Pacific region has started to accelerate rapidly ahead of an expected recovery in the US.
According to analysts at Credit Suisse First Boston, the scale of the growth in Asia will be much larger than in North America.
The group predicts that non-Japan Asia's GDP will increase by 7% and perhaps more in 2002, roughly twice the pace of the US.
Umberto Alvisi, part of CSFB's global strategy team, says: 'This fast expansion could imply that, over a period of time, Asian exports might end up boosting the European economy by about the same amount as the stimulus from the US.'
Chris Tracey, global strategist at JP Morgan Fleming, says that improving US data and a buoyant Nasdaq have helped to produce strong gains for the technology and export-driven Taiwanese market.
While Korea's Kospi index has been constrained by profit-taking following its recent steep ascent, Hong Kong's Hang Seng, Singapore's Straits Times, and Australia's All Ordinaries have all risen as of late.
From the start of the year to 18 March, the Hong Kong index was up 2.22%, the Taiwan weighted index was up 9.70%, the Australian market rose 6.92% and the South Korea index has risen 20.55%, all in sterling terms.
Tracey notes: 'Asian markets are highly leveraged to US growth, thanks to their export-driven economies, while valuations are extremely attractive.
'The Hong Kong stock market is currently trading on a P/E ratio of 13.5 times trailing earnings, South Korea trades on 13.8 times and Singapore on 15.9 times. We anticipate outperformance from this region during the rest of 2002.'
Also positive for the region are signs that non-Japan Asia domestic demand is starting to improve, says Goldman Sachs. The group believes that capital goods imports in Korea, Taiwan and Singapore have improved since November.
However, the group says it will be more positive on the region once March's trade data has been released, although until then, the increase in US orders for electronic components makes the future look brighter.
According to Aberdeen Asset Management, the outlook for Hong Kong banks, while making progress in strengthening their balance sheets and provisioning for non-performing loans, remains cautious.
In Korea, the group believes economic numbers have continued to reveal stronger-than-expected economic growth, which have led to an expectation of a rise in interest rates in the short term. February 2002's unemployment numbers showed the country's jobless rate at 2.8%, the lowest level since October 1997.
The consumer confidence index also rose in February to its highest level since the index was first compiled in November 1998.
Consumer confidence is also improving in Thailand, with a rise in its confidence index and sale of vehicles remaining strong, although Aberdeen notes that rising political pressures and intensifying conflict between the government and media have contributed to a drop in Thai stocks.
Thailand political pressures affect stcoks.
Outlook for Hong Kong cautious.
Korean index held back by profit-taking.
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