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Asia Pacific Outlook of the Week
ECONOMIC OVERVIEW
Export growth helps Hong Kong buffer U.S.
downturn
• Citi analysts believe that strong trade flows with China and
other Asian economies helped Hong Kong avoid being hit
sharply by the U.S. downturn. The pace of export growth in
May likely to remain strong, although it is forecasted to fall
slightly to 13.8% from 14.5% the prior month.
• In Singapore, Citi analyst believe that inflation in May likely
edged up to 7.6% from 7.5% in May, as the price of food and
petrol rose, and forecast full year inflation to reach 6.2%.
Industrial production in May is projected to shrink to 7%
compared with a 5.7% decline in April, due to weak foreign
demand and Singapore dollar appreciation.
• In Taiwan, Citi analysts expect policy makers to accelerate
monetary tightening by raising rates by 25bps in June and
12.5bps in September and December, on prospects for a
better economic outlook and mounting inflation pressure.
EQUITIES
Favour shorter dividend payback periods
• In an uncertain economic environment, Citi analysts favour
markets and sectors that offer shorter duration dividend
payback periods. Citi analysts note that the payback period in
Asia have been getting shorter, with Taiwan, the Philippines
and Malaysia offering short payback periods, and Korea, India,
Indonesia and Hong Kong having long payback periods.
• Sector wise, Citi analysts note that media, banks and telecoms
enjoy shorter payback periods, relatively higher cash flow and
attractive yields. Although real estate offers a short payback
period as well, Citi analysts are less positive in light of slower
retail sales and a weakening office market.
• On a mid-cycle valuations basis, Citi analysts find that markets
in the Philippines, Hong Kong and India appear expensive.
Instead, Citi analysts continue to favour Taiwan, and favour
banks, telecoms and the technology sector.
FIXED INCOME
Opportunities may exist within Asian high grades
• Asian high grade spreads have widened to levels last seen in
the 2001 slowdown. Given that Asian fundamentals (stronger
balance sheets, higher sovereign ratings and more robust
banking sector) are better than in 2001-2002 (when the region
was just recovering from the Asian financial crisis), Citi
analysts believe that there may be opportunities within Asian
high grade bonds.
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PLEASE VISIT THE CONTRIBUTOR'S WEBSITE
Million Leads
Internet marketing, Lead Generation
millionleads.googlepages.com
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