http://www.businesstimes.com.sg/sub/...07535,00.html?
Published November 27, 2008
Asian markets to see 2009 rebound: S&P
China, HK stocks seen as more resilient; STI target for end-09 - 2,300
By JAMIE LEE
STANDARD & Poor's (S&P) expects Asian markets to rebound next year on the back of a healthier banking system and lower corporate and financial-system gearing.
'There is limited de-leveraging to be undertaken in Asia and, thus, the absence of prolonged financial-system restructuring,' said Lorraine Tan, head of S&P equity research in a report launched on the Asian market outlook.
She told a media conferences that regional stock market could see range-trading over the short term and re-test the October lows, adding that '2009 is likely to be a market of two halves'.
'We suspect that first-quarter 2009 is likely to reveal ugly corporate performances and this may dampen sentiment in first-half 2009,' she said in the report.
'With economic growth anticipated to rebound in second-half 2009, we believe that equities are likely to have a strong fourth- quarter 2009 as the recovery becomes apparent and investors begin to re-rate stocks upward.'
Based on a comparison with the 1987-1988 market downturn, S&P expects the Hang Seng (HSI) index to hit bottom in 13-20 months' time. The HSI is targeted to hit 15,000 points at the end of this year, wrote Ms Tan, and could hit 21,000 points at end-2009.
S&P also favours China and Hong Kong as their economies are showing more resilience compared with the other Asian markets, wrote Ms Tan, who viewed both markets as 'overweight'. Most of the other regional markets are viewed by S&P as 'neutral'.
S&P also noted that falling commodity costs should favour the industrial and power sectors.
'We do not expect oil and coal prices to fall for too long and some rebound is likely in second-quarter 2009,' said Ms Tan.
'While we feel that there are increasing opportunities in the industrials space, we remain wary on most airlines as demand is likely to remain weak in light of slowing global demand for goods and given our view that the crude oil price may see some rebound in second-quarter 2009,' she added.
She put an end-2008 target for Singapore's Straits Times Index at 2,000 points and the end-2009 target at 2,300 points.
Commenting on the Asian economies, S&P Asia-Pacific chief economist Subir Gokarn told reporters that the 'relative strength of the Asian financial systems at this point should allow them to transmit the monetary stimulus through to the end-users of credit...somewhat quicker than elsewhere.'
He expects Singapore's GDP to grow between 2 per cent and 2.5 per cent this yar, and a 0.5 per cent to 1 per cent decline in 2009's GDP.