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| Asian mkts not fully out of the woods: Barclays |
| Bloomberg / Apr 14, 2009, 00:07 IST |
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The Asian equity markets are not yet clear of trouble though the recent rally suggests the worst is over, said Barclays Wealth Management.
"We are still cautiously optimistic," said Manpreet Gill, Asian Strategist at Barclays Wealth, which manages $213 billion. "We aren't completely out of the woods. We are still seeing negative export growth data."
The MSCI Asia Pacific Index has surged 25 per cent from a more than a five-year low on March 9 as governments and central banks expanded measures to stem the global recession.
"Conditions have definitely improved but the rally, in itself, has been quite sharp over a short period of time. So, most probably, we might see some correction," Gill said.
Upcoming releases of corporate earnings, which may continue to disappoint, are among key risks investors should watch out for, he said.
To hedge against such risks, Barclays is advising clients to invest in stocks of industrial, materials, consumer discretionary and technology companies as well as high-yield corporate bonds, Gill said.
Chinese stocks should continue to outperform as economic conditions in China have "improved much more" than anywhere else, Gill said.
The Shanghai Composite Index has gained 38 per cent this year, making it the second-best performer among 88 key stock gauges tracked by Bloomberg globally. Stocks rallied on optimism that the government's trillion yuan ($585 billion) stimulus package and record new lending will spur a recovery in the world's third-largest economy amid the global recession. Interest rates were cut five times from September to December.
Gill is also bullish on prospects for stocks in India, Singapore and Hong Kong.
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