groups believe region has left behind bad debts of the late 1990s
Asia fund managers believe the region has managed to pull itself out of the morass of bad debts and financial crisis which overhung the markets in the late 1990s.
The region contrasts starkly with Latin American economies, which are being dragged down by problems in Argentina and Brazil.
'Some people have learnt from the Asian crisis better than others and some have displayed incredibly short memories,' said David Gaits, fund manager at First State Investments.
'From the company point of view, when it comes to corporate governance, a lot of the practices of the past have begun to disappear. Companies are more focused than they were on profitability and shareholder value.'
The most obvious gauge of reform is return on shareholder equity, agrees Christian Dangerfield, chief investment officer for Asia at Govett Investments. 'In the early 90s, this was mid to high single digit, that is 6%-8%, and a lot of Asian companies were destroying value from the shareholders' perspective,' he said.
As a result of restructuring, he added, debt loans have been cut and unproductive business lines closed, leading to a general improvement in returns on equity, which now averages 12%-13%.
Since the banking crisis in 1997 and 1998 in countries like Thailand, Malaysia and the Philippines, the best banks have cleaned up their loan books, have adequate capital once more and are ready for growth, according to Gaits.
He said: 'We have reasons to believe the cycle is about to start again. Interest rates are at historic lows in a lot of these countries and confidence is beginning to improve. We have seen that coming through in consumer numbers, credit cards, car sales and property, particularly in Malaysia and Thailand.'
Gaits said no such optimism is evident in Latin America, particularly following the Argentine crisis.
'Latin America is in the middle of going into crisis,' Dangerfield noted.
'Arguably, what the US has done in terms of bailing out Brazil puts a floor under it in terms of market damage. Clearly, there is a lot of economic and political damage, which is going to take a long time to address and rebuild. Latin America is going to be under pressure and it will be difficult to justify investing in that part of the world.'
When it comes to sector investing, there is a consensus between First State and Govett that technology is one area best left alone or treated with caution.
Overcapacity in the sector is a key issue and, even if the US economy recovers strongly, this is unlikely to create enough demand.
At the same time, many technology companies have cash on their balance sheets or are in strong financial positions, so there is no particular drive towards rationalisation or consolidation. This affects Taiwan, in particular, where the majority of the tech companies are based.
'When volumes start to recover, companies are going to be falling over themselves to win orders and competing heavily on price, so we are not convinced margins will return anywhere near where they were two or three years ago,' Gaits said.
Dangerfield is also underweight technology, anticipating earnings downgrades.
'There are some specific stocks with growth dynamics that mean they are not going to be so exposed to continued sluggishness in global capital spending,' he said.
'Asian telecoms also invested quite heavily in the latter part of 1990s, building up infrastructure and capacity. The sector has seen growth rates falling and these are unlikely to recover as global penetration of mobile telephones reaches saturation point and demand slows.
'China now has the majority of mobile subscribers in the world now. A lot of telecoms were trod on hard in the recent Wall Street weakness and are beginning to look interesting from a valuation perspective. Stocks like China Mobile, the leading telecom provider in China, are now looking relatively cheap.'
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