Notwithstanding the bird flu, the economic recovery
in Asia looks set to continue through 2004 as:
| • |
The global economy looks set to go from strength
to strength. |
| • |
Stronger local currencies help to subdue
inflationary pressures in the region and thus
keep interest rates low. |
Of course, the other side of the coin is that stronger
currencies in the region may undermine the region's
competitiveness.
Central banks from Japan to Thailand are alert to
this risk and keep intervening to maintain competitiveness.
Our main concern had been the meteoric rise of many
markets in the region. But the stock market correction
at the end of January/beginning of February may offer
an opportunity for those who missed the boat.
Although valuations are not as cheap as they were
at the beginning of 2003, they still appear to offer
value.
Therefore, we retain our overweight recommendations
for Asia.
| • |
Thailand doubled in 2003, but still does
not look expensive. |
| • |
Malaysia is also expected to do well, helped
by hopes for the new administration and a potential
ringgit revaluation after this year's election. |
| • |
Taiwan is a normal place to look for those
intent on investing in the tech sector. |
| • |
Korea offers cheaper valuations than Taiwan. |
| • |
Indonesia's elections could provide opportunities
via cheap valuations for the more adventurous. |
|
Bulls and Bears 
