By Yasmine Yahya The Straits Times
They rarely appear on the radar screen of many investors but shares in some of Southeast Asia’s least watched markets were knockout performers this year.
Their numbers are right off the scale and even put big guns like Singapore and Hong Kong in the shade.
Indonesia’s stock market surged 46 per cent, Thailand was up 41 per cent, the Philippines shot up 38 per cent and Malaysia’s bourse added 19 per cent.
The only developed market in that league was South Korea, which was up 22 per cent. The Straits Times Index’s 10 per cent increase looks pale by comparison while the 5 per cent gain in Hong Kong barely registers.
Citibank analysts noted that in Southeast Asia, only Indonesia, Thailand and Malaysia are trading at levels higher than before the 1997 Asian financial crisis. "Singapore has jumped 117 per cent since March 2009, but remains 20 per cent below the 2007 peak," a recent Citi report said.
Although analysts have been bullish on Southeast Asian bourses since the end of 2007, Nomura’s chief Asian equity strategist, Sean Darby, said they are at their most attractive today.
"In 2010 Thailand, Malaysia, Indonesia and Philippines... had large current account surpluses and relaxed monetary policies, but they also had in many cases very low free-floats, only a few large-capitalised names and were not cheap," he noted in a report released in early December.
But he added: "Investors were enticed by strong domestic demand in economies where the credit cycle was embryonic. Low household leverage, negative real interest rates and positive terms of trade have caused these markets despite their size to become ‘investible’."
Hong Kong was a more surprising laggard. Although foreign investors chased Hong Kong shares up earlier in the year, they also left the market in droves when the government began implementing policies to slow down a potential overheating.
A similar phenomenon was seen in Shanghai, which dived 16 per cent this year, as punters bailed out after China tightened its monetary policy to offset the impact of hot money inflows.
If any investors are pondering what might have been in 2010 if they had invested in, say, Indonesia instead of Hong Kong or Japan, they might like to consider two other gravity-defying performances in this part of the world.
Mongolia’s bourse, the world’s smallest by market capitalisation, was also its best performer this year, surging 134 per cent, while Sri Lanka took second place with a rise of 96 per cent.
source - www.island.lk
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