APAC equity markets likely to rebound in 2009: S&P

Global credit rating agency Standard and Poor's (S&P) today said Asia-Pacific (APAC) stock markets, including India's, are likely to rebound in 2009 as they are in the process of bottoming out.

"Although economic and corporate news is likely to remain negative and uncertainty still pervades the global financial system, we see that markets will have retraced in line with and in some cases exceeded, movements in previous bear markets in terms of both value and time frame," S&P's Equity Research Director Lorraine Tan said.

The S&P report stated that initiatives taken by the governments globally to boost financial system would have a positive impact on the stock markets in the next year.

"We believe these moves (by the government) will have a positive impact on equity markets next year particularly with equity values at historically low levels when investor confidence recovers," Tan said in the report.

Further, rebound to be seen by Asian markets would be relatively strong given healthier banking system and low corporate and financial-system gearing.

In its overall outlook for Asia-Pacific equity markets, S&P said 2009 is likely to be a market of two halves, but ultimately better than 2008.

"We suspect that first-quarter 2009 is likely to reveal ugly corporate performances and this may dampen sentiment in first-half 2009," the report said.

"With economic growth anticipated to rebound in second-half 2009, we believe equities are likely to have a strong fourth-quarter 2008 as recovery becomes apparent and investors begin to re-rate stocks upward," S&P report stated.

However, the main themes over the next 1-2 months would continue to focus on extent of the global economic slowdown.

Asian economies are not expected to escape global easing and economic data and corporate guidance from third-quarter results are likely to be watched closely.