Investors should buy shares of Sony Corp, Hon Hai Precision Industry Co (鴻海精密) and Samsung Electronics Co before an expected pick-up in global economic growth this year, Credit Suisse Group's private banking unit said.
"Export-led and tech heavy" stock markets in Japan, Taiwan and South Korea are likely to lure funds from South Asia, said Fan Cheuk Wan, the head of the unit's Asian equity research team.
Gains in the Organization for Economic Cooperation and Development's index of leading indicators and higher International Monetary Fund global growth forecasts lend weight to her argument. Technology accounts for 61 percent of Morgan Stanley Capital International's Taiwanese benchmark, 21 percent of MSCI Korea and 15 percent of MSCI Japan.
upside
"We see good upside for the Asian technology recovery in the second half of this year," Hong Kong-based Fan told reporters at a briefing today. "We've seen a sharp uptrend in global leading indicators. There is a correlation between this and export-led markets."
Separately, Fan said the easing of rules limiting Chinese investors from moving money overseas will benefit mainland stocks listed in Hong Kong. China Netcom Group Corp (
A measure of technology shares on the MSCI Asia Pacific Index has gained 9.8 percent this year, less than the regional stock benchmark's 13 percent advance. Technology shares may be set to overtake regional equities if Fan's thesis proves correct.
The analyst predicts Japan's Nikkei 225 Stock Average to rise to 20,500 by the middle of next year, which is 16 percent above today's closing level. Taiwan's TAIEX may climb to 10,400, she said. The index today closed at 9,566.42.
"The tech sector is traditionally strong in the third quarter of the year because the sales of computer-related things will increase during the summer holidays," said Tat Auyeung, who oversees US$400 million of Asian assets at Apex Capital Management in Hong Kong. "Taiwan will probably benefit the most from the gains of the tech sector since its economy is tech-led."
The outlook for global growth contributes to Fan's view that Asian equities will continue to outperform global counterparts. MSCI's Asian index has climbed an average 23 percent each year in the past four, more than the MSCI World's 17 percent.
sustainable
"We firmly believe that the long-term bull run in Asian equities can be sustained," Fan said.
The analyst anticipates the relaxation of investment rules under China's qualified domestic institutional investor program to help boost Hong Kong's Hang Seng China Enterprises Index to 15,000 by the middle of next year, a 13 percent gain from yesterday's close of 13,357.02.
The index, which tracks the so-called H shares of 41 Chinese companies, has climbed 29 percent this year, more than the benchmark Hang Seng Index's 16 percent gain.
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