Investors should favor stocks such as Siam Cement Pcl and Cathay Financial Holding Co (
Domestic demand in Asia's emerging markets will outpace developed economies, said Mowat, JPMorgan's Hong Kong-based regional strategist. Interest rates remain low enough to stimulate growth, he said.
"I'm a great believer," Mowat, 39, said in an interview yesterday. "You want domestic demand stocks with relatively predictable revenues." His favored markets are Taiwan, Thailand and Singapore.
Growth in Asia's emerging-market countries, which includes those three countries, is expected to be 6.25 percent in 2005, the International Monetary Fund said last month. That compares with the fund's estimate for more than 1.5 percent expansion in Japan, the world's second-largest economy.
Taiwan's gross domestic product in the January-March quarter rose 2.5 percent from a year earlier after increasing 3.3 percent in the fourth quarter, the nation's statistics bureau said last month.
The Bank of Thailand expects the economy to expand at least 4.5 percent this year. Siam Cement, Thailand's third-largest publicly traded company, in April said first-quarter profit increased 35 percent, more than some analysts expected. Cement sales rose 15 percent on increased demand.
"We remain confident that Asian domestic demand will be robust," Mowat and analyst Joanne Goh wrote in a June 6 report. "The environment supports steady growth from domestic demand companies."
Cathay Financial, Taiwan's biggest-financial services company, on April 22 reported a first-quarter profit of NT$4.79 billion (US$152 million), more than the unaudited earnings of NT$4.75 billion the company had reported two weeks earlier.
First-quarter profit at Chinatrust Financial Holding Co (
"The story here is that loan growth is now positive," Mowat, who's been with JPMorgan since 2002, said in the interview.
"Operating profits are looking okay and valuations are such that these things are buys."
Taiwan's government lowered its 2005 growth projection to 3.6 percent from 4.2 percent, saying high oil prices and rising interest rates are hurting global demand for the nation's goods. Exports of products such as semiconductors and liquid crystal displays account for half of Taiwan's economy.
Signs are that demand for Asian-made computer-related products may increase. Mowat recommends holding shares of Taiwan Semiconductor Manufacturing Co (TSMC,