Asian equity markets have endured a difficult period in 2008, with many indices showing substantial ...
Asian equity markets have endured a difficult period in 2008, with many indices showing substantial declines. The underlying causes of equity market weakness across the region have included the general uncertainty surrounding the extent of the global slowdown and the increases in energy and food prices that have pushed inflation to multi-year highs, necessitating tighter monetary policy in a number of countries. These issues have impacted global, not just Asian, markets and as inflationary pressures abate, the dominant theme for policymakers in the coming months will be sustaining growth.
Undeniably, Asian economies are experiencing some moderation in economic growth. As the often-quoted proxy for Asia, China is a good example. Having recorded consistent double-digit growth in recent years, economic expansion for 2008 is forecast to be just above 9% according to the IMF, which may represent a weaker relative performance, but is still a remarkably strong return. The same is true for the Indian economy, which has been among the worst hit by rising inflation. Indian economic growth for the second quarter was 7.9%, down from 8.8% in the first three months of the year. There is scope for further softening of growth in India over the coming quarters, but as is the case for China, in absolute terms the rate of expansion remains healthy. This is particularly relevant when looking at the economic performance of major Western mar-kets, which are currently struggling to move forwardsat all, with the US and Europe forecast by the IMF to grow this year at around just 0.5% and 1.4% respectively.
Economic growth in Asia has been supported by a combination of new export markets that have been able to offset, at least in part, the weakness in trade with the West, and also by resilient domestic demand. Asian countries have successfully exploited the new opportunities available in areas including Latin America, the Middle East and emerging Europe. Many of these economies have benefited from the strength in commodity prices that has characterised much of the investment landscape over the past year, and while prices have fallen back recently, the prospects for these regions continue to look robust. The underlying strength of many Asian economies has also been a catalyst for rising incomes, which have supported consumer demand. Positive drivers of growth are also evident in the fiscal strength of many Asian governments, which gives them the flexibility and resources to stimulate growth.
- Asia has not escaped the effects of the global economic turmoil;
- However, despite falling back, GDP growth rates are still impressive in absolute terms;
- Long-term fundamentals are intact and valuations now look attractive.
Data Source: (c) 2008 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.
Two global vehicles
'Further plug advice gap'
Must appoint separate CEOs and boards
Advisers do come out well
Will report to Mark Till