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AIC attendees expect stable or strong performance for Asian equities in 2011
Asian equities should gain ground in 2011, with Chinese stocks and Energy leading the way, but Japan will underperform and inflation casts the longest shadow over the markets this year, according to a survey carried out among attendees at the Credit Suisse Asian Investment Conference.
The MSCI Asia ex-Japan index will rise between 10% and 20% in 2011, according to 46% of attendees during an audience participation session held this morning at the AIC. Another 38% expect the index to end the year between 10% down and 10% up, with the balance of voters predicting more extreme moves.
China was the most popular market among AIC attendees, with 17% saying they expected Hong Kong-listed H shares to do best and 20% forecasting that domestic A shares would be the strongest performers. Indonesia (10%) and Korea (11%) also attracted respectable shares of the votes.
“The views of a record audience at the AIC show that investors remain confident about Asian markets in spite of the challenges posed by the disaster in Japan, geopolitical risks, inflation and valuations in some markets,” said Ali Naqvi, Head of Equities for Asia Pacific at Credit Suisse. “Global investors are as excited as ever about Asia and we have seen incredibly strong interest in the region during this week.”
Attendees’ views on Japan and the impact of the March 11 earthquake and tsunami presented an insight into how much they expected the disaster to affect Japan’s own market by comparison to the broader regional markets. When asked what they expected the biggest risk to be in 2011, only 9% of voters opted for the impact of the disaster in Japan. Yet 19% of attendees expected it to be the worst performing market in Asia Pacific in 2011, ranking it second only to India (26%) in the audience’s expectations for underperformance.
Energy was the most popular sector by some distance among AIC attendees, with 35% expecting it to be the best performer this year. Telecoms Services and Utilities, two typically stable industries, were expected to be the worst performing sectors by 19% and 23% of attendees.
Returning to the risks that are giving attendees the greatest concern, global inflation (36% of attendees) stood out as the biggest risk for 2011, with turmoil in the Middle East and North Africa (26%) close behind. AIC attendees did not expect the Middle East and North Africa to be as much of a risk factor in 2011, however, indicating instead that slower than expected U.S. growth (24%) and China’s real estate market (22%) would join inflation as the biggest threats, in their view.
Energy and Consumer stocks were attendees top sector choices in voting at the 2010 AIC and ultimately proved to be two of the three best performing sectors in the remainder of the year. Voters last year also identified inflation in China and sovereign debt risk as two of the biggest risk factors for 2011. “Results from the 2010 AIC show that AIC attendees have a keen eye for opportunities as well as risks,” commented Mr. Naqvi.
Credit Suisse’s 14th Asian Investment has been its biggest ever, with more than 2,000 investors and over 270 corporates attending. Voting sessions were held on Tuesday and Friday but views in both sessions were consistent with each other. Among the voters on Friday, 36% were long only funds, 16% hedge funds, 15% were other kinds of investors and 10% were corporates.
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Day 5: Photo Album
