Jumaat, 28 Oktober 2011

Rhb Asset Management. No new recession, says Credit Suisse


KUALA LUMPUR (Oct 27, 2011): The world economy is not expected to fall into a new recession, says a senior executive at Credit Suisse AG, but he sees it growing at a slow pace.
"I do not expect we will go through another recession, although the risk of slipping back into a recession is higher now than it was before. The global economy will grow at a much slower pace because of the slow recovery in the US, a very problematic European economy due to the sovereign debt crisis, and an Asian economy that will continue to grow but at a lower rate as it is also affected by the slowdown in the West," Credit Suisse vice-chairman for Asia-Pacific, Jose Isidro N. Camacho, told SunBiz on the sidelines of CIMB Asean Conference 2011.
Giving only a 25-30% chance of the global economy falling into a new recession, Camacho said Asia's equity markets are largely being influenced by the negative sentiments in the global markets.
"Asian stock markets are still being driven by fear and nervousness in Europe and partly in the US. That's why Asian equities today generally are a lot cheaper than they were a while ago in terms of their price earnings," he said.
Still, Camacho reckons that Asian equity markets are "oversold", citing South Korea and Taiwan because they are major exporting countries.
He said the markets' reaction to news is exaggerated, but believes that they would correct themselves when corporates in Asia start reporting their earnings.
"If companies in South Korea, Taiwan and other open economies like Malaysia, Thailand, Hong Kong and Singapore are able to show high sustainable earnings growth, you can see a turnaround in sentiments of Asian markets," he said.
On a recovery in the global economy, Camacho said most importantly, the markets will have to see how Europe's debt problems are solved.
"I think the markets will have to see a credible solution to what's going to happen to Greece. Secondly, what kind of support mechanism they will have for European banks which may be affected by the writedowns of some of the sovereign credits.
"Also, the markets will have to see a credible set of measures to avoid the contagion effect on the bigger economies like Italy and Spain," he added.
On market prospects, Camacho said: "There will be some stocks, bonds or markets that will benefit more than others and if you have the courage to make those investment decisions early, you probably have more upside. But it is difficult to have that courage today because the world is very nervous."
Still, he believes that listed companies that are much more domestic-driven will probably enjoy stronger growth, such as those in consumer products and utilities.
"That's because they are not as dependent on the global economy, but on domestic consumption and for that reason, they are more likely to enjoy sustainable good earnings. Right now, it is the global macro picture that is influencing the stock prices much more than individual companies' results," he said.


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