Corporate earnings to be better next year: survey

Corporate earnings to be better next year: survey
By Millet Enriquez | Posted: 14 December 2010 2151 hrs

SINGAPORE : Asian economic growth and corporate earnings next year will be better compared to this year, according to a survey of 19 fund managers by OCBC Bank's Wealth Management unit.

The poll found that fund managers also hold the view that Asian and emerging markets equities will outperform those in developed markets next year.

They said Asia's strong fundamentals and growing domestic consumption will fuel economic growth and corporate earnings for the region.

Among the Asian bourses, the fund managers prefer China, India, Indonesia and South Korea.

But they said developed markets should not be ignored altogether, as they would still offer selective opportunities.

The OCBC report said a good way would be a "barbell strategy of exposure to Asia together with an allocation of higher yielding quality stocks with sound business models from the developed markets" as proposed by Henderson Global Investors.

While fund managers prefer equities over bonds, they said there are also opportunities among Asian and emerging market bonds, denominated in local currencies.

Despite policy risks, Prudential Asset Management said it is sanguine about Asian bonds and expects financials and defensive high-yielding non-financials to perform well in the medium-term.

The commodity sector is also rife with investment opportunities, the fund managers said, citing the potential uptrend for gold prices and other soft commodities in the next two years.

They said global uncertainties, easy monetary policies and rising inflationary pressures are likely to send the price of gold to new highs in 2011.

Overall, the fund managers said inflation, possible interest rate hikes and the escalation of the euro zone debt crisis will be some of the key risks for 2011.

- CNA/ms

- wong chee tat :)