2011-03-29 13:19

HK conference participants said domestic shares may lead market

HONG KONG - Chinese stocks and energy companies are expected to lead advances by Asian equities this year. That's according to a survey of participants at a Credit Suisse Group AG investor conference in Hong Kong last week.

The worst performances may come from India and Japan, said a statement on the poll results posted on Credit Suisse's website on Friday. The MSCI Asia excluding the Japan Index will rise between 10 percent and 20 percent in 2011, according to 46 percent of respondents. The gauge, which tracks more than 600 companies, has fallen 1.6 percent this year, after a 17 percent climb in 2010.

"People are broadly bullish," said Jahanzeb Naseer, the Hong Kong-based product manager for Asian research at Credit Suisse, on Friday.

Credit Suisse's 14th annual Asian Investment Conference attracted more than 2,000 investors and delegates from 270 companies, according to the bank's statement. Results from the poll indicate some investors think concerns relating to Chinese measures to curb inflation may be overdone, Naseer said.

The Shanghai Composite Index has climbed 6.8 percent this quarter, the best performer among Asia's biggest equity markets. The gauge is still 5.1 percent below a seven-month high reached on Nov 8. Annual inflation in China reached 4.9 percent in February, slowing from a two-year high of 5.1 percent in November. Policymakers have boosted borrowing costs three times since the start of 2010 while raising banks' reserve requirements nine times, including an increase on March 18.

"The general vibe is that inflation is not going to be that much of a worry, that in the second half of the year, inflation concerns are going to wane," Naseer said. "A lot of people are thinking that because of the tightening policies growth is going to be considerably lower. It's going to be a little lower, but it's still going to grow in about the 9 percent range. That's a pretty good scenario for China."

ICBC Credit Suisse Asset Management Co, a venture between the largest bank in China and Switzerland's second-largest lender, is "bullish" on China's stocks because equity prices are inexpensive and the government is approaching the end of its tightening policies, said portfolio manager Hao Kang on Monday.

Poll respondents favored energy companies amid optimism that higher crude prices will bolster earnings, Naseer said. Gauges of material and energy shares in the MSCI Asia excluding Japan Index rose more than 4 percent in 2011, the most of 10 groups.

The MSCI gauge climbed 4.4 percent last week, the most since November. The gauge trades at 12.7 times estimated profit, down from a multiple of 14.6 times on Dec 31.

Bloomberg News