Asian stocks may climb a further 23 percent to 450 by the end of the year amid signs of a stronger-than-expected economic recovery, JPMorgan Chase & Co said.
JPMorgan also raised India’s equity market to “overweight” from “neutral” amid political stability and stepped-up economic reforms, analysts led by Adrian Mowat said in an Aug. 6 report. Investors should own more shares than indicated by benchmark indexes in Taiwan, South Korea, Indonesia and Thailand, with exporters among the best bets, they said.
The MSCI Asia Pacific Index lost 0.6 percent to 111.90 as of 5:58pm in Tokyo, leaving it little changed for the week. The gauge has climbed 58 percent from a five-year low on March 9 on speculation a recovering global economy will boost corporate earnings.
Japan’s TOPIX Index dropped 0.1 percent. Hong Kong’s Hang Seng Index lost 1.6 percent. Australia’s S&P/ASX 200 Index lost 0.6 percent. Taiwan’s stock market was shut yesterday because of Typhoon Morakot.
JPMorgan’s forecast represents an 82 percent advance in the MSCI regional measure for the full year, which would be its best annual gain on record.
“Economic activity in a number of countries is close to or at its peak,” the analysts wrote. “Real GDP for Asia ex-Japan, Indonesia, China, Australia and India is forecast to be higher in the second quarter of 2009 than any of the previous quarters. However, their markets are more than 20 percent below their peaks.”
Mowat, the brokerage’s chief Asian and emerging-market strategist, had predicted in June that the MSCI regional index would climb to 400 this year.
Aberdeen Asset Management PLC is more cautious, saying that global stocks are now fully priced following gains this year. Chinese shares have already entered a bubble, Hugh Young, who helps oversee the equivalent of US$220 billion as Aberdeen’s Asian managing director, said in an interview on Thursday.
Indian stocks may benefit as low interest rates and inflation spur economic growth, JPMorgan said. The benchmark Bombay Stock Exchange Sensitive Index fell as much as 1.7 percent yesterday. It has climbed 58 percent this year, the eighth-best gain among 89 indexes tracked by Bloomberg globally.
“India is a current account deficit economy and needs to import capital to keep growing quickly,” the analysts wrote. “The credit crunch in our view is over. Low external interest rates combined with low levels for the Indian rupee should accelerate capital inflows and growth.”
The brokerage added Tata Motors Ltd, the Indian truckmaker that owns Jaguar Land Rover, and Infrastructure Development Finance Co, a financier of roads, ports and utilities, to its list of recommended stocks in India.
Acer Inc (宏碁), the world’s third-biggest maker of personal computers, and Korean Air Lines Co were also among companies that JPMorgan added to its recommended portfolio, the report said.
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