Experts say Asian markets to rebound in 2009

Experts say Asian markets to rebound in 2009

BANDAR SERI BEGAWAN

Tuesday, November 25, 2008

ASIAN markets are set to rebound during the second quarter next year, experts yesterday said during an investment forum here.

"The Asian markets will recover faster than the real economy although banks might take more time," said Sam Hanbury, managing director of Deutsche Asset Management (Asia) Limited, who was among the panelists during the Global Finance and Investments Roundtable.

Global markets have fallen over the past months as the financial crisis, which has its roots in the US, worsens.

Still, experts agreed Asian markets will recover next year, noting the region doesn't have problems with toxic debts like those facing developed countries as Asian banks have deleveraged following the Asian financial crisis of 1997.

Companies in Asia invested back in their shares, consolidated operations while government spending focused on infrastructure framework for better development which means that the balance sheets in Asia are on the positive side, the panelists said. No other part of the world can match the current balance sheets of Asian countries, they said.

Inflation is also no longer a problem due to subsidised commodities, the panelists said. Also, they pointed to the big savings of Asian households, which cushion financial systems.

The financial crisis started due to cheap credit, which led to the accumulation of huge debts.

Aberdeen Asset Management Asia's Peter Elston, who was present at the roundtable but not as a panelist, blamed credit default swaps complex financial instruments for the crisis.

Credit default swaps are used to hedge against the risk of borrowers defaulting on their debt, or to speculate on a company's credit quality. Lax regulation over their trading led to abuse.

"The current credit default swap is like buying insurance from the Titanic and issued by the people from the Titanic," he said, referring to the risky nature of trading these financial instruments.

In his company presentation, Ajmal Bhatty, chief executive of Takaful, Tokio Marine Middle East Ltd, said takaful, or Islamic insurance, is the new growth sector in Islamic finance. Takaful growth is seen at 15 to 25 per cent annually against a mere five per cent growth of conventional insurance, according to his presentation, which also noted takaful industry's "extraordinary level of activity since 2003.

In an interview, he said, one aspect of Islamic insurance that can be further explored is extending the range of savings plans and life insurance available in the market today. "Life insurance and savings plans have not developed so much as the conventional insurance side, which is focused on protection," he said.

Ian Baldwyn, general manager of DST International Pte Ltd, a financial solutions provider, said technology supporting the Islamic financial sector is lacking at present. "Historically, the technology is obviously built for the existing market convention in transacting." Junaidi Bahrum and Debbie Too

The Brunei Times