India in, Thailand out: Russell
India was the most preferred Asian market and Thailand the least, in a somewhat bearish Asian markets outlook released by Russell Investments.
India was favoured due to lower valuations following a long period of underperformance, said Russell chief investment strategist for Asia Pacific Andrew Pease, presenting Russell’s March 2011 Asia Market Commentary.
Thailand’s high dependence on oil meant the nation was more susceptible to fluctuating oil prices, and the upcoming general elections had the potential to lead to further political unrest, according to Russell.
Asian markets in general were facing increasing headwinds of inflation and rising valuations, and were likely to lag US markets, Pease said, whereas global developed markets did not seem particularly expensive and were probably on the ‘okay’ side of fair value.
China was another market that was still preferred despite inflation pressures and the likelihood of further tightening, and Korea also seemed likely to continue its recent good performance despite inflation risks, the Russell research stated.
Indonesia was another less preferred market due to high valuations, although its growth outlook remained positive and valuations had improved somewhat recently. Russell had a neutral outlook on Singapore, Taiwan, Malaysia and Hong Kong.
Volatility is likely to be an ongoing theme in 2011 generated by government debt concerns, shifting views about monetary policy, and by global political events, the report stated.
The challenge for investors for this year will again be to maintain discipline amid potential large swings in market sentiment, Russell said.
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