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Asian markets will continue to be the most favourable funds destination thanks to their brisk economic prospects and sturdy domestic demand, HSBC Asset Management predicted yesterday.
Asia funds under management posted a robust 32 per cent rise to US$35 billion last year, compared to the 17 per cent growth in global funds totalling US$209 billion.
"In view of the decent domestic economies and attractive valuation, we see many high growth opportunities in Asian markets," said Ayaz Ebrahim, director and chief investment officer, equities, Asia Pacific (ex-Japan) at HSBC Asset Management.
Ebrahim explained Asia's equity markets still offer good return prospects with the strongest value residing. Stock valuations in Asia, excluding Japan, remain relatively cheap at around 12 times, compared to 17 times in the US and Europe.
The company particularly favours markets in Malaysia, Thailand and India in light of their sturdy domestic consumption and reflation, while South Korea, the Philippines and Indonesia are less favourable given weak economy outlook and sluggish demand, Ebrahim said.
He added that interest hikes, rising oil prices, a possible hard landing in China are major risks ahead in Asian markets.
"But we believe the opportunity of a soft landing in China is likely to happen," Ebrahim said.
Fixed asset investment in China eased to 24.5 per cent in November from 47.8 per cent in the first quarter 2004, while loan growth slowed from the peak of 23.9 per cent in August 2003 to 13.5 per cent in November last year.
Meanwhile, Ebrahim believed the economic losses incurred by the tsunami on Thailand are manageable under the rebuilding effort and investment of the government.
He assumed if the number of tourists slumped by one third in tsunami-hit areas, the total impact on Thailand's economy would be only about 0.5 per cent.
(China Daily HK Edition)
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