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Investors eye emerging markets and Japan in 2013
Source: Agencies |
December 24, 2012, Monday
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Print Edition
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WITH a whiff of global recovery in the air and central bank liquidity abundant, investors in 2013 are packing their bags for China, Brazil, Russia and long-dormant Japan.
Reuters global stock market polls yet again tell a story of BRIC rebirth. After two years in which the stock markets of the four giants underperformed even those of bailed-out Greece, Ireland, Portugal, Italy and Spain - despite superior economic growth rates - the old ploy of hoovering up what's been beaten down seems unshakable.
China's long-suffering Shanghai Composite - one of the few major bourses still in the red this year, down 25 percent from early 2011 and still less than half its 2007 peak - is easily the favorite destination for money managers, with median forecast gains of 17 percent.
In separate Reuters poll last week of 55 major asset managers globally, Shanghai was also the top emerging market pick for over two-thirds of them.
Frustrated China bulls are keen to see the gradual rebalancing of the world's No. 2 economy from exports to consumption show through in the Shanghai markets.
"From a valuation perspective and given the turn in the cycle, the Chinese equity market - surprisingly a massive underperformer this year - is the one that stands out," said Philip Poole, head of strategy at HSBC Global Asset Management.
But perhaps the surprise package is Japan's Nikkei index, a view last week's election win for the Liberal Democratic Party is likely to reinforce given its pledge to step up the fight against domestic deflation.
Even Jim O'Neill, the Goldman Sachs Asset Management chairman who coined BRIC acronym a decade ago, sees Japan as 2013's best performing equity market, although he stressed hedging the yen due to the pivotal role a significantly weaker currency is likely to take in reviving the economy and market.
"There's quite a widespread market belief that if the yen weakens, one wants to own the Nikkei and obviously with an export orientation," he told clients.
O'Neill's top picks still include China and Russia, at numbers two and three respectively.
The European Central Bank's August pledge to intervene, and steady progress by euro governments in advancing tighter fiscal and banking union within the bloc have effectively removed the risk of a euro collapse, transforming these markets' prospects.
Reuters global stock market polls yet again tell a story of BRIC rebirth. After two years in which the stock markets of the four giants underperformed even those of bailed-out Greece, Ireland, Portugal, Italy and Spain - despite superior economic growth rates - the old ploy of hoovering up what's been beaten down seems unshakable.
China's long-suffering Shanghai Composite - one of the few major bourses still in the red this year, down 25 percent from early 2011 and still less than half its 2007 peak - is easily the favorite destination for money managers, with median forecast gains of 17 percent.
In separate Reuters poll last week of 55 major asset managers globally, Shanghai was also the top emerging market pick for over two-thirds of them.
Frustrated China bulls are keen to see the gradual rebalancing of the world's No. 2 economy from exports to consumption show through in the Shanghai markets.
"From a valuation perspective and given the turn in the cycle, the Chinese equity market - surprisingly a massive underperformer this year - is the one that stands out," said Philip Poole, head of strategy at HSBC Global Asset Management.
But perhaps the surprise package is Japan's Nikkei index, a view last week's election win for the Liberal Democratic Party is likely to reinforce given its pledge to step up the fight against domestic deflation.
Even Jim O'Neill, the Goldman Sachs Asset Management chairman who coined BRIC acronym a decade ago, sees Japan as 2013's best performing equity market, although he stressed hedging the yen due to the pivotal role a significantly weaker currency is likely to take in reviving the economy and market.
"There's quite a widespread market belief that if the yen weakens, one wants to own the Nikkei and obviously with an export orientation," he told clients.
O'Neill's top picks still include China and Russia, at numbers two and three respectively.
The European Central Bank's August pledge to intervene, and steady progress by euro governments in advancing tighter fiscal and banking union within the bloc have effectively removed the risk of a euro collapse, transforming these markets' prospects.
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