Asian stocks posted double-digit growth during 2012 and our readers are betting that they will do even better this year.
Around 45% of voters in last week’s web poll said that Asian equities would deliver returns of 10% to 20% during 2013, while another 30% said they were expecting even bigger growth and less than 10% said they expected markets to fall.
HSBC’s equity strategy team agree, saying in a note last week that Asian equities would likely deliver 15% to 20% growth this year, against “a backdrop of low valuations and rising expectations for an economic growth recovery”.
It also estimated earnings growth of 10% to 12% across the region, along with an average dividend yield of 4%.
Central banks’ easing policies are credited with much of the improvement in sentiment. Indeed, the mere expectation of easing helped lift stocks in Japan ahead of the election of its new government. Now that Shinzo Abe and his team are in power, analysts are once again optimistic that Japan’s economy could rise from its slumber.
In other words, optimism is back on the agenda. Until something happens.
A repeat of the debate over America’s debt ceiling probably wouldn’t help. However, with both political parties at loggerheads over even the most basic issues, it would be optimistic to expect a return to sanity.
The situation is so desperate that some people have urged the president to use a constitutional loophole that they claim gives him the power to mint a platinum coin of any denomination — $1 trillion seems to be the preferred number — without the approval of Congress. Just when you thought monetary policy couldn’t get any more unorthodox.
Whatever happens, the Fed will continue to ease, and HSBC expects that to have implications for stock pickers.
“In 2012, markets focused on earnings reliability, and growth stocks outperformed,” it said in a research report last week. “By contrast, in 2013, we think value stocks will benefit from improving financial conditions as a result of intervention by major central banks.”
