Asia can escape worst of crisis

The Straits Times
Nov 6, 2008 | 3:57 PM
Asia can escape worst of crisis

ASIAN stock markets and economies may escape the worst of the global downturn, with China, Hong Kong and Taiwan best placed to ride through the turbulence, Morgan Stanley said.

Equity strategists at the brokerage added to their 'overweight' position in Taiwan in their model portfolio of stocks and raised South Korea to 'equal-weight' from 'underweight,' said a report on Thursday. Malaysia was cut to 'underweight' from 'overweight,' reported Bloomberg news.

'Asia's fundamentals are far stronger,' analysts Malcolm Wood, Ryan Tsai and Corey Ng wrote. 'A combination of easier monetary and fiscal policy and lower commodity prices should enable Asia to avoid the worst of the global downturn.'

China and Japan have slashed borrowing costs in the past two weeks to ease the economic fallout from the global credit crunch that is pushing some countries into a recession. The turmoil, which caused the collapse of Lehman Brothers Holdings Inc., has frozen credit markets and triggered a rout in equities worldwide that wiped out more than $25 trillion of market value this year.

'If the worst of the global liquidity crisis is behind us, macro strength is probably going to become a key market driver,' the report said. 'This should favor Greater China.'

China is the 'strongest' to cope with the global slowdown while Australia, Malaysia and India 'face challenges,' it said.