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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: Step1 who wrote (7410)	11/6/1998 2:37:00 AM
From: Dayuhan	Respond to of 9980

From the IHT: Paris, Friday, November 6, 1998 Morgan Stanley Sees Stocks Rebounding in Asia HONG KONG - The equity markets of Hong Kong, Singapore and Thailand are likely to rise by 20 percent to 30 percent in the next five months, an Asian strategist for Morgan Stanley Dean Witter said Thursday, reversing the firm's bearish stand on the region. The turnaround was due chiefly to a rapid fall in global interest rates and despite a continuation of Hong Kong's relatively high real, or inflation-adjusted, borrowing costs, Markus Rosgen, the strategist, said. ''We have reconsidered our roughly 18-month-old bearish prognosis for the Asia-Pacific stock markets,'' he said. The change originated more from outside the region than within the Asia-Pacific area, he said. Most significant had been the outlook for U.S. interest rates. The Federal Reserve Board has cut its benchmark rate on federal funds by 50 basis points, or half a percentage point, and Morgan Stanley forecast that the Fed would further cut rates by a full percentage point between now and the middle of next year. Within Asia, U.S. rates remain the most important variable in many countries because lower rates allows those countries to more easily fund their operations in an uncertain financial environment, Mr. Rosgen said. Interest rates are now well below their levels at the start of 1998, he said, and only in Hong Kong, Singapore and Taiwan are interest rates above their three-year averages. The strongest corporate earnings rebound should be seen in South Korea,where earnings per share are forecast to rise by 500 percent in 1999 after falling 90 percent in 1998. In Hong Kong, earnings are estimated to grow by 5 percent to 7 percent in 1999, compared with a contraction of 15 percent in 1998. The best-performing markets in the region are forecast to be Hong Kong and Singapore. The Hang Seng Index is forecast to rise to 13,000 points and the Straits Times Index to 1,700 points by the end of the first quarter of 1999. The Hang Seng Index closed at 10,221.98 Thursday, and the Straits Times Index finished at 1,299.52. ''We have raised Hong Kong's weighting to overweight from underweight,'' he said, referring to allocations of investments in Morgan Stanley's model Asia-Pacific mixed-assets portfolio, ''and made Singapore overweight from neutral and Thailand overweight from underweight.'' ''We have also cut our weighting in Australia to neutral from overweight and made New Zealand underweight from overweight.''