Investors favor S.E. Asia over China - Survey

[GoFlyKiteNow]

Southeast Asia gains investors’ favor over China: survey

By Kevin Plumberg

HONG KONG (Reuters) - Southeast Asian emerging markets are looking increasingly attractive to wealthy Asian investors as they grow less optimistic on prospects in Greater China, a survey showed on Thursday.

Thanks to streams of foreign investment from the West and other parts of Asia, Southeast Asia is home to some of the region's best performing stock markets this year, shrugging off bouts of volatility which have dragged down far larger markets.

Shares in Shanghai, on the other hand, are among the worst performing in the world behind those of debt-laden Greece, losing nearly a quarter of their value this year and weighing heavily on stocks in Hong Kong.

The ING Investor Dashboard survey showed the Greater China sentiment index fell 14 percent to 127 in the second quarter from the first quarter, though it remained just within optimistic territory.

Sentiment on Southeast Asia rose 3 percent to 141 from the first quarter.

"The Asian investor is more attuned to what is happening in other Asian markets," said Grant Bailey, regional general manager with ING Investment Management in Hong Kong.

"If you don't have great returns coming out of the traditional G7 or G3 markets, you will go to where the returns are."

Overall in Asia ex-Japan, sentiment slipped to 136 in the second quarter from 145 in the first quarter and was still in optimistic territory. A year ago, the index was at 124, having reflected continued optimism since then.

China's credit tightening measures were mainly behind the slide in investor confidence there, though Bailey noted that shifts of political power were a theme running through the survey.

The biggest rise in optimism came from the Philippines, where last month Benigno Aquino III won a presidential election by the widest margin since 1986.

By contrast, the biggest drop in sentiment was in Australia, where former Prime Minister Kevin Rudd faced a dramatic slide in support because of a controversial mining tax that led to his ouster from power.

Besides Sri Lankan equities, Indonesia, the Philippines and Thailand are the only other Asian stock markets with double-digit returns this year.

Indonesian stocks were close to record highs on Thursday, while equities in the Philippines hit 2-1/2-year highs.

Foreign investors have also been strongly drawn to bonds issued by the two countries, as well as those from Malaysia, attracted by their strong growth prospects and expectations that their currencies will appreciate further.

Even with the steep rise in Southeast Asian stock markets, they still are not the most expensive in the region.

Among the countries represented in MSCI's benchmark Asia Pacific ex-Japan index, India and Hong Kong are the first and second-most expensive markets purely on the basis of prices to 12-month forward earnings expectations, Thomson Reuters I/B/E/S showed.

The Philippines, Malaysia and Singapore are No 3, 4 and 5, suggesting there more may be more value in those markets.

The ING survey also showed that Asian investors planned in third quarter to gain more exposure to energy, financial services, resources, technology and consumer stocks.

However, their top choice of asset for the third quarter was gold, reflecting concerns about accelerating inflation across Asia.

The ING survey was conducted in June 2010 and had responses from 3,792 affluent investors across 12 Asia Pacific markets.

Southeast Asia gains investors' favor over China: survey

 

[GoFlyKiteNow]

China Has Worst Stock Market, Best IPO Gains of 2010
Bloomberg

China has the world’s worst performing equity market this year.

While the Shanghai Composite Index has slid 19 percent for the steepest drop among the 10 largest stock markets, IPOs are beating the country’s benchmark equity indexes by 33 percentage points on average in their first month of trading, data compiled by Bloomberg show.

Chinese individuals are restricted from international investments. This has forced them snap up $25 billion in IPOs this year, three times more than were sold in the U.S., as inflation erodes savings and the government clamps down on property speculation.

The rally by newly listed companies has made their shares almost twice as expensive relative to profits as the broader stock market, a sign to firms from KBC-Goldstate Fund Management to hedge fund Platinum Partners that a bubble may be forming.

“Most of the China IPOs are overvalued,” said Larry Wan, Shanghai-based deputy chief investment officer at KBC-Goldstate, which oversees about $583 million. “It’s difficult to believe they are going to be able to deliver the sort of exponential growth that the valuations imply.”

The fastest expansion among the 20 biggest economies has helped spur the surge in China’s IPO market.

 

[syed putra]

This will be like the early 1990's again. Let's celebrate before the next crash/currency crisis.

 

[saratogas]

No wonder locally listed China shares are falling...

 

[longbow]

Exactly what Beijing has been trying to engineer. To deflate the real estate bubble. Much of it is from drop in prices of real estate companies.



Incidentally, market is treating Chinese bonds almost as secure as US Treasuries.

 

[GoFlyKiteNow]

Exactly what Beijing has been trying to engineer. To deflate the real estate bubble. Much of it is from drop in prices of real estate companies.



Incidentally, market is treating Chinese bonds almost as secure as US Treasuries.

how is that possible,?
US treasuries are backed by a floating international dollar.

China remimbi is not floating currency and internationally
not convertible., which is a must condition for investors.

 

[huahero]

All these articlss are just part of the Westerns trying to attack the credibility of China.

Especially USA, forcing China to re-value the RenMingBi.

 

[longbow]

GFK Read this:

BEIJING (Dow Jones)--Moody's Investors Service Inc. said Friday it is reviewing China's government bond rating for a possible upgrade due to the healthy growth of the Chinese economy and the government's strong fiscal position.

In a statement, Moody's cited "the resilient performance of the Chinese economy following the onset of the global financial crisis, and expectations of continued strong growth over the medium term."

China issues very little debt overseas and Chinese investors already treat government securities as essentially risk free. But the statement may still be seen as a vote of confidence in China at a time when there are concerns about emerging risks from its bank loan-fueled stimulus program.

Moody's said it believes banks, rather than the government, will absorb most of the credit losses from the surge in lending last year, but it added transparency is lacking on the extent of potential losses.

"While uncertainty persists about the size and soundness of off-balance sheet local government financing operations in particular, we also believe that the central government has ample fiscal headroom to absorb future losses," Moody's said.

"With net international financial assets equal to about 50% of GDP--bolstered by almost $2.5 trillion in official foreign exchange holdings--only a handful of highly rated advanced industrial economies, such as Norway, Switzerland, Japan, Hong Kong and Singapore, have a stronger international investment position than China," Moody's said.

Moody's currently rates Chinese government bonds as A1, which were upgraded from A2 in November 2009.

The credit rating agency said it believes the rebalancing of China's economy toward domestic consumption is already underway, and is likely to intensify in the future due to rapid wage growth.

"Since last year, private consumption has been rising as fast as, or even faster than nominal GDP growth," Moody's said.

-By Aaron Back, Dow Jones Newswires; (8610) 8400-7701; [email protected]

how is that possible,?
US treasuries are backed by a floating international dollar.

China remimbi is not floating currency and internationally
not convertible., which is a must condition for investors.

 

[longbow]

GFK - Oct 11 Bloomberg Article:

http://www.bloomberg.com/news/2010-...onds-approaching-treasuries-china-credit.html

At a time when governments around the world are facing growing debt, China’s bonds are becoming almost as safe as U.S. Treasuries in the market for insuring against defaults.
Five-year credit-default swaps contracts on the nation’s bonds fell 29 percent in the past month, the biggest drop among more than 80 nations, and ended last week at 56 basis points, according to data compiled by CMA and Bloomberg. Default swaps for the U.S. were little changed at 46.

China’s bonds have become cheaper to insure than those of the U.K. and France since August as the fastest-growing economy surpassed Japan to become the world’s second-largest. Moody’s Investors Service said last week it may raise China’s debt rating from A1, five levels below the top Aaa grade.
“Right now the strongest balance sheet in the world is China’s,” Daniel Arbess, who runs the $2.1 billion Xerion fund for Perella Weinberg Partners in New York, said in an interview with Bloomberg Television on Oct. 7. “China can use that balance sheet strength and the political centralized control that it has over its economic policy to literally finance and drive the ongoing urbanization and industrialization of its economy.”

The 10 basis-point difference between contracts on China and the U.S. is the narrowest since at least January 2008, according to data from New York-based CMA, which provides data on the market that suggests both countries should have the second-highest debt rankings. Credit-default swaps pay the buyer face value if a borrower fails to meet its obligations, less the value of the defaulted debt. A basis point equals $1,000 annually in a contract protecting $10 million of debt.

how is that possible,?
US treasuries are backed by a floating international dollar.

China remimbi is not floating currency and internationally
not convertible., which is a must condition for investors.