Rollercoaster Asian stocks set to rise in 2008: analysts
HONG KONG: Asian stock markets gave investors a white-knuckle ride in 2007 but most are up sharply and analysts predict turbulent gains next year despite a severe US financial crisis.
"I think Asian markets will be up over the whole of 2008 – but they are set to fall substantially over the next few months first," said Shanghai-based expert Andy Xie, a former Morgan Stanley economist.
Chinese and Indian shares led the pack this year, fizzing up about 85 percent and 40 percent respectively and defying fears that they had already risen too far.
China held a series of sometimes huge stock flotations that raised billions of dollars, while foreign investors continued to pour money into Indian stocks.
But the key Japanese bourse had a year to forget as the Nikkei-225 index slumped about 12 percent amid a global credit crunch rooted in the ailing US economy.
"The overall Japanese market has come down quite sharply in the last few weeks," said Tokyo-based fund manager Hideo Shiozumi, the chief executive of Shiozumi Asset Management.
Asian markets have struggled since November, mainly due to fears about the impact of an expected US economic slowdown after a mortgage default crisis there, analysts say.
China's attempt to curb high economic and stock market growth, for instance by hiking borrowing costs repeatedly, has also affected sentiment, they say.
Xie warned that the Hang Seng index in Hong Kong could fall some 20 percent to 22,000 points over the next few weeks after rising about 35 percent this year. But he predicted a recovery in Asia from March onwards.
Among other major Asian bourses, South Korea is up about 28 percent since the start of 2007, Singapore roughly 11 percent and Australia some 10 percent. But Taiwan is little changed.
Some of the region's smaller markets did well, with Indonesian shares up 46 percent and the Malaysian market rising roughly 26 percent in 2007.
Shares in Thailand and the Philippines are up about 17 percent, but New Zealand has slipped back two percent.
"I suspect that Asian shares will continue to do well over the next 12 months," said Matt Robinson, an analyst at Moody's Economy.com in Sydney.
He said 2007 had been characterised by persistent stock market growth in Asia interrupted by sharp sell-offs.
The latter included a slide in February, when Chinese shares tumbled nearly nine percent in a single day, he said.
The sell-offs also included a slump from late July as the US mortgage default crisis ballooned, sending Asian markets down 10 percent or more, he added.
The crisis involves struggling "sub-prime" mortgage holders with poorer credit histories.
It has caused billions of dollars in financial losses and a severe credit crunch with banks now jittery about lending money. It has also raised the threat of a US economic recession.
Some economists think Asia is better placed than in the past to weather a US slowdown – a view known as "decoupling" – due to the region's now vast foreign exchange reserves and huge infrastructure spending programme.
But they add that woes in the world's biggest economy, a key buyer of Asian exports, and the global credit crisis are bound to have some impact, including on the stock market.
One of the key risks for Asia's economy in 2008 is the possibility of significant turbulence on Wall Street spreading to Asian financial markets, Singapore-based Morgan Stanley analyst Chetan Ahya wrote recently.
"The decoupling thesis is really going to be tested over the next six months," concluded Robinson from Moody's Economy.com.
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Rollercoaster Asian stocks set to rise in 2008: analysts
HONG KONG: Asian stock markets gave investors a white-knuckle ride in 2007 but most are up sharply and analysts predict turbulent gains next year despite a severe US financial crisis.
"I think Asian markets will be up over the whole of 2008 – but they are set to fall substantially over the next few months first," said Shanghai-based expert Andy Xie, a former Morgan Stanley economist.
Chinese and Indian shares led the pack this year, fizzing up about 85 percent and 40 percent respectively and defying fears that they had already risen too far.
China held a series of sometimes huge stock flotations that raised billions of dollars, while foreign investors continued to pour money into Indian stocks.
But the key Japanese bourse had a year to forget as the Nikkei-225 index slumped about 12 percent amid a global credit crunch rooted in the ailing US economy.
"The overall Japanese market has come down quite sharply in the last few weeks," said Tokyo-based fund manager Hideo Shiozumi, the chief executive of Shiozumi Asset Management.
Asian markets have struggled since November, mainly due to fears about the impact of an expected US economic slowdown after a mortgage default crisis there, analysts say.
China's attempt to curb high economic and stock market growth, for instance by hiking borrowing costs repeatedly, has also affected sentiment, they say.
Xie warned that the Hang Seng index in Hong Kong could fall some 20 percent to 22,000 points over the next few weeks after rising about 35 percent this year. But he predicted a recovery in Asia from March onwards.
Among other major Asian bourses, South Korea is up about 28 percent since the start of 2007, Singapore roughly 11 percent and Australia some 10 percent. But Taiwan is little changed.
Some of the region's smaller markets did well, with Indonesian shares up 46 percent and the Malaysian market rising roughly 26 percent in 2007.
Shares in Thailand and the Philippines are up about 17 percent, but New Zealand has slipped back two percent.
"I suspect that Asian shares will continue to do well over the next 12 months," said Matt Robinson, an analyst at Moody's Economy.com in Sydney.
He said 2007 had been characterised by persistent stock market growth in Asia interrupted by sharp sell-offs.
The latter included a slide in February, when Chinese shares tumbled nearly nine percent in a single day, he said.
The sell-offs also included a slump from late July as the US mortgage default crisis ballooned, sending Asian markets down 10 percent or more, he added.
The crisis involves struggling "sub-prime" mortgage holders with poorer credit histories.
It has caused billions of dollars in financial losses and a severe credit crunch with banks now jittery about lending money. It has also raised the threat of a US economic recession.
Some economists think Asia is better placed than in the past to weather a US slowdown – a view known as "decoupling" – due to the region's now vast foreign exchange reserves and huge infrastructure spending programme.
But they add that woes in the world's biggest economy, a key buyer of Asian exports, and the global credit crisis are bound to have some impact, including on the stock market.
One of the key risks for Asia's economy in 2008 is the possibility of significant turbulence on Wall Street spreading to Asian financial markets, Singapore-based Morgan Stanley analyst Chetan Ahya wrote recently.
"The decoupling thesis is really going to be tested over the next six months," concluded Robinson from Moody's Economy.com.
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