An Investors’ Guide to Asian Markets in 2016 (Barron’s)
1. Singapore: Singapore has been hit hard by the slowdown in global trade and is highly vulnerable to retreating hot money. The housing market and banks are also likely to get hit by rising U.S. rates because the Singapore dollar is pegged in part to the greenback. The government has enough cash to pump the economy itself, but CLSA hopes it takes advantage of a landslide victory in elections this year to roll back popular restrictions on white-collar immigration. But Singapore’s ruling party isn’t cynical enough to backtrack that quickly.
4. Hong Kong: Stocks look cheap, so Morgan Stanley rates it “overweight.” But with its currency pegged to the dollar, the economy is fragile and the property market likely to fall and send shudders through the market.
5. India: Investors found out that Prime Minister Narendra Modi can’t walk on water after all. He hasn’t been able to revive investment or push tax reform through the legislative briar patch. So what? India’s projected 7.7% growth rate is unbeatable and Morgan Stanley says corporate profitability compares well, too. India is also relatively less vulnerable than its neighbors in Asia to rising U.S. rates. But stocks are expensive on the whole, so be choosy and sidestep companies with high debt. Better yet, consider Indian bonds instead. One stock worth considering: hydroelectric power generator NHPC (533098.IN), which trades at just 65% book value.
2. The Philippines: Presidential elections this summer are going to sidetrack government investment plans, but will also put more cash into voters’ hands. Add buoyant remittances from overseas workers and the Philippine peso is one of the region’s least vulnerable to rising U.S. rates. Corporate earnings should thus hold up along with the country’s 5.9% forecast GDP growth rate, one of Asia’s highest. One name: property developer Megaworld (MEG.PH), which Jefferies rates as a “buy.”