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Tuesday, 15 December 2009
Asian Stocks to Extend Bull Market, JPMorgan Says
Asian stocks outside of Japan may extend a bull market into 2010, helped by declining risk premiums, a recovery in economic and earnings growth, and low interest rates, according to JPMorgan Chase & Co.
Asian stocks outside of Japan may extend a bull market into 2010, helped by declining risk premiums, a recovery in economic and earnings growth, and low interest rates, according to JPMorgan Chase & Co.
The MSCI Asia-Pacific excluding Japan Index may climb to 530 by the end of next year, JPMorgan analysts led by Adrian Mowat wrote in a report today, representing a gain of 29 percent. They cut their rating on Thai shares to “neutral” from ‘overweight.”
The MSCI index rose 0.4 percent yesterday to 409.58, taking its gain this year to 66 percent amid speculation that the worst of the global recession has passed. The measure is poised for its best year since 1993, when it advanced 80 percent.
“The ‘three steps to heaven’ bull market continues,” the analysts wrote. “Early 2010 conditions should continue to be very favorable for Asian equities with strong growth, positive earnings estimate revisions, acceptable inflation, ongoing rally in credit markets.”
Mowat, JPMorgan’s Hong Kong-based chief Asian and emerging- market strategist, said in August the regional index may rise to 450 by the end of this year. His forecast for the index next year compares with Goldman Sachs Group Inc.’s prediction of 540.
The global economy should grow 3.4 percent next year, including “above consensus” expansion of 3.3 percent in the U.S. and 2.6 percent in Europe, benefiting demand for the region’s exports, according to the report. Interest rates in the largest developed economies are also likely to stay unchanged next year, the brokerage also said.
‘Challenging’ Second Half
Still, the second half of the year may be more challenging for Asian shares because of a “less favorable base effect” for inflation and a potential slowing in earnings-estimate upgrades, the analysts said.
“Risks are high for Year One of the recovery,” the analysts wrote in the report. “In Asia, inflation is the main threat to the bull market.”
They downgraded Thai stocks due to a lack of “near-term catalysts,” the court’s suspension of some projects in Map Ta Phut, Thailand’s largest industrial port, and “political issues.” The brokerage cut Land & Houses Pcl from its recommended portfolio of shares and replaced Bangkok Bank Pcl with Siam Commercial Bank Pcl.
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Asian Stocks to Extend Bull Market, JPMorgan Says
By Shiyin Chen
15 December 2009
Asian stocks outside of Japan may extend a bull market into 2010, helped by declining risk premiums, a recovery in economic and earnings growth, and low interest rates, according to JPMorgan Chase & Co.
The MSCI Asia-Pacific excluding Japan Index may climb to 530 by the end of next year, JPMorgan analysts led by Adrian Mowat wrote in a report today, representing a gain of 29 percent. They cut their rating on Thai shares to “neutral” from ‘overweight.”
The MSCI index rose 0.4 percent yesterday to 409.58, taking its gain this year to 66 percent amid speculation that the worst of the global recession has passed. The measure is poised for its best year since 1993, when it advanced 80 percent.
“The ‘three steps to heaven’ bull market continues,” the analysts wrote. “Early 2010 conditions should continue to be very favorable for Asian equities with strong growth, positive earnings estimate revisions, acceptable inflation, ongoing rally in credit markets.”
Mowat, JPMorgan’s Hong Kong-based chief Asian and emerging- market strategist, said in August the regional index may rise to 450 by the end of this year. His forecast for the index next year compares with Goldman Sachs Group Inc.’s prediction of 540.
The global economy should grow 3.4 percent next year, including “above consensus” expansion of 3.3 percent in the U.S. and 2.6 percent in Europe, benefiting demand for the region’s exports, according to the report. Interest rates in the largest developed economies are also likely to stay unchanged next year, the brokerage also said.
‘Challenging’ Second Half
Still, the second half of the year may be more challenging for Asian shares because of a “less favorable base effect” for inflation and a potential slowing in earnings-estimate upgrades, the analysts said.
“Risks are high for Year One of the recovery,” the analysts wrote in the report. “In Asia, inflation is the main threat to the bull market.”
They downgraded Thai stocks due to a lack of “near-term catalysts,” the court’s suspension of some projects in Map Ta Phut, Thailand’s largest industrial port, and “political issues.” The brokerage cut Land & Houses Pcl from its recommended portfolio of shares and replaced Bangkok Bank Pcl with Siam Commercial Bank Pcl.
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