S&P Asian Market Outlook

STANDARD & Poor's (S&P) expects Asian markets to rebound next year on the back of a healthier banking system and lower corporate and financial-system gearing.

There is limited de-leveraging to be undertaken in Asia and, thus, the absence of prolonged financial-system restructuring and regional stock market could see range-trading over the short term and re-test the October lows, adding that '2009 is likely to be a market of two halves.

The first-quarter 2009 is likely to reveal ugly corporate performances and this may dampen sentiment in first-half 2009.

With economic growth anticipated to rebound in second-half 2009, Equities are likely to have a strong fourth- quarter 2009 as the recovery becomes apparent and investors begin to re-rate stocks upward.

Based on a comparison with the 1987-1988 market downturn, S&P expects the Hang Seng (HSI) index to hit bottom in 13-20 months' time. The HSI is targeted to hit 15,000 points at the end of this year, wrote Ms Tan, and could hit 21,000 points at end-2009.

S&P also favours China and Hong Kong as their economies are showing more resilience compared with the other Asian markets, wrote Ms Tan, who viewed both markets as 'overweight'. Most of the other regional markets are viewed by S&P as 'neutral'.

She put an end-2008 target for Singapore's Straits Times Index at 2,000 points and the end-2009 target at 2,300 points.