Asian Stocks Are 2009’s Best Bet, Credit Suisse’s Parker Says

(Bloomberg) -- Asian stocks will be the world’s best performers this year as earnings growth in the region rebounds first and the Chinese government’s stimulus program bolsters the economy, Credit Suisse Asset Management said.Asian shares are attractively valued and the region’s currencies may also strengthen over the next two years, boosting the outlook for corporate earnings, said Bob Parker, who helps oversee $600 billion as London-based vice chairman of Credit Suisse Asset. After Asia, investors should buy stocks in Latin America and the U.S., as Europe and Japan underperform, he added.

“Asian equity markets, particularly if you look at price- earnings figures relative to dividends, earnings growth and GDP growth, are very cheap indeed,” Parker said today in an interview in Bali, Indonesia, where he is attending a conference.

Asian developing markets make up half of the 10 best- performing stock indexes in 2009, led by China and Taiwan. The MSCI Asia-Pacific excluding Japan Index has jumped 18 percent this year, compared with a 2.9 percent retreat in the Standard & Poor’s 500 Index.China is the sole country whose economy is starting to show “significant improvement” in growth, helped by the government’s 4 trillion yuan ($586 billion) stimulus plan, Parker said. He expects the economy to expand “close to 8 percent” in the second half, he added.The CLSA China Purchasing Managers’ Index rose to a seasonally adjusted 50.1 in April, signaling that the nation’s manufacturing expanded for the first time in nine months, according a statement today. China’s economy grew 6.1 percent in the first quarter, the slowest pace since at least 1999.

China’s Growth
China is among emerging markets that will “break out” into a bull market at the end of the year as falling interest rates and easing inflation make equities more attractive, Templeton Asset Management Ltd.’s Mark Mobius said in an interview in Bali yesterday.Companies that supply commodities and cater to consumer spending in the world’s third-largest economy are among the best bets, said the fund manager, who helps oversee $20 billion in emerging-market assets.Still, a rally in Chinese equities means that valuations have become less attractive, prompting Credit Asset Management trim some holdings in the nation’s domestic stock market in March, Parker said. The benchmark Shanghai Composite Index is valued at 27 times reported earnings, up from a low of 13 times in October, according to data tracked by Bloomberg.

“What we did in December is that we took positions in emerging markets, notably in China and Brazil, and what we did recently was we broadened those positions in Asia by taking some risk off the table in China and maintaining our positions by diversifying into India and Korea and Taiwan,” Parker said.Within Asia, Credit Suisse Asset favors infrastructure- related companies in India and technology shares in South Korea and Taiwan, he said, without naming any companies.