Nearly 90% of fund managers fear there is a risk of a bubble developing in Asian ex Japan stock mark...
Nearly 90% of fund managers fear there is a risk of a bubble developing in Asian ex Japan stock markets this year, according to Morningstar.
The worrying data follows strong performance in the Morningstar ex-Japan index last year as it rose 57% in dollar terms. Although only 5% of 62 fund management groups contacted thought the risk was large, another 83% said that the risk was there to a limited extent while only 12% thought it was not there at all.
Concern was most apparent over H-shares (domestic Chinese shares listed in Hong Kong). In all, 96% said the risk of overvaluation was already apparent, with 14% of these saying the risk was 'great'. H-shares were up 152% in 2003 in dollar terms.
Despite this concern, 42% said the region would perform best in 2004, with South Korea and then Hong Kong leading the way. Greater China - mainland China, Hong Kong and Taiwan - had emerged as an integrated investment region to a 'great extent' for 37% of respondents and to a 'limited extent' to another 54%.
Commodity prices are set to receive another boost this year due to Chinese demand - 52% thought prices would rise to a great extent and another 46% said the rise would be limited.
Other research carried out by Morningstar showed that 63% of fund groups thought large caps would outperform small caps, with 13% thinking the opposite.
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