Singapore Stock Market News

Asia Pacific - Equity Strategy

StockFanatic
Publish date: Tue, 03 Sep 2013, 02:04 PM
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Asia equities have not yet emerged out from under the headwinds of capital flight, currency weakness and deteriorating growth. However, from this point on, such headwinds are likely to drive a greater wedge between country performance rather than broad-based regional weakness. Policy makers have finally woken up to the severity of the currency situation and are responding. Even if it is too little too late, policy action has reintroduced some two-way volatility.

We wait for evidence of currency stability before positioning for a reversal in underperforming markets (India & Indonesia). We prefer those with improving fundamentals (China) or leveraged to a global recovery (Korea, Taiwan & Singapore). Malaysia has a solid outlook but is likely to lag if markets rally and lose its immunity premium if markets fall. We therefore make a non-consensus call and cut to underweight.
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