Asian Stocks Have Yet to Reflect Recovery, Mowat Says

By Bloomberg News
June 8 (Bloomberg) -- Asian stocks have yet to reflect
expectations for a “powerful, synchronized” recovery in the
global economy, JPMorgan Chase & Co.’s chief Asia strategist
Adrian Mowat said in a Bloomberg Television interview today.
The global economy will rebound on record fiscal stimulus
by governments worldwide and low interest rates, he said, adding
that airlines and travel industry stocks are among those that
will do “very well.”
The MSCI Asia Pacific Excluding Japan Index is trading 42
percent lower than its peak in October 2007. The gauge has
advanced 34 percent this year.
Asian stocks “have yet to price in a recovery in trade
that’s going to be powerful, synchronized,” said Mowat.
“Markets are still bearish on global growth, on emerging
markets growth.”
MSCI’s Asian ex-Japan index will rise to 400 by the end of
the year, Mowat wrote in a June 1 note. That would be a 21
percent gain from last week’s close and a 62 percent annual
rally, the best since 1993.
The rally this year means the MSCI gauge is now valued at
18.9 times reported earnings, more than its five-year average of
14 times, according to Bloomberg data.
Templeton Asset Management Ltd.’s Mark Mobius said June 4
the money supply is set to “explode” worldwide and boost
emerging-market stocks as central banks pump cash into the
financial system to counter the global recession.

Taiwan, South Korea

Mowat said he’s “still positive” on China stocks. Markets
including Taiwan, South Korea and Mexico may offer “higher
returns,” he added.
The rally in China’s stocks may end as corporate profits
fail to recover, Xue Lan, head of China research at Citigroup
Inc. said in a June 4 Bloomberg Television interview.
The MSCI China Index of mostly Hong Kong-traded Chinese
stocks has rallied 34 percent in the second quarter, compared
with 15 percent for South Korea’s Kospi Index, 27 percent for
the Mexico Bolsa Index and 28 percent by Taiwan’s Taiex Index.
George Soros, chairman and founder of Soros Fund Management
LLC, said China will be the first country to recover from the
global financial crisis, the Shanghai Daily reported today.