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2008 Asian markets outlook
CNN's Andrew Stevens asks Edgar Chuan of Descartes Investment Management what the future holds for the Asian markets
No, this is where everybody has been anticipated because when Goldman Sachs came out as a report almost two years ago talked about BRIC, explicitly, Brazil, Russia, India and China. And this four country because given the, I mean, the people and education level and the economic growth of this four country that definitely, you know, this four markets, everyone has anticipated them to be performing well.
OK. On that basis then, 2008 we will see pretty much more of the same?
Yes, I will say 2008 is gonna be pretty much the same and I think if actually we would talk about Asia's, I think maybe Vietnam has standed a very good chance to be performing very well as well.
We are just looking at Vietnam that was a 28% compared with say India 30% to 40%, to Shanghai nearly 85%.So Vietnam underperforming at the moment why do you like it in 2008?
Vietnam is underperforming is because of the width and the depth of the market because right now the entire, you know, stock exchange market capitalization is only about 20 billion dollars and given that they are still in a very primitive stage and there is a lot of room for growth. So once, you know, you will see more of the state-owned enterprises as well as the private, I will say, privately-owned company go on to be listed in Vietnam, you will be seeing a very different kind of market and also they are trying, the Vietnamese government is trying to improve the infrastructure of both exchanges in Hanoi and Ho Chi Minh City.
Looking at Shanghai and India, the two best performing markets in 2007, there was talk this year, a lot of talk that certainly Shanghai was overheating. It was a bubble forming, to a lesser degree, India as well getting too hot. But you are saying it's still gonna be very hot next year?
Yes, because when you look at the liquidity of the market. There's still a lot of excess money or hot money is traveling around, you know, globally and when you look at the opportunities, this take for example, the US's subprime worries and probably that's gonna lead to some economic declines because the consumers are not gonna spend and Japan isn't enough room for that as well. And where are you gonna put your money, right? And given that India and China, the fundamentals are still there, the economic growth is still very strong and everyone is projecting at least 10% of growth of GDP next year. And given that, you know the fundamental plus, there are a lot of money out floating. So these two markets will definitely be performing very well next year.
Do you think looking at the economic fundamentals of the stock market the people talk about though that these two markets are probably overvalued, they are probably in a bubble situation.
I would say this is really way too early to say that bubble is forming because given that when you are in an emerging market, you tend to give them a little bit higher in terms of PE or PB ratio. That is because they will enjoy a better growth than the developed countries. It's just like sort of same kind of banks that in China you get 4.5 times PB, price book, but you won't be able to get that in the States because for Citibank probably about 2.5 times price book ratio. That's about it.
Finally, how does a retail investor play a market like Shanghai or India, particularly Shanghai because it's so close to outside investors?
You will be able to buy some ETF, exchange traded fund, and you are able to buy into some of the funds that is China-focused and I think that would be the best way for you to participate in the market but again, you will always have to look at any of your investment on the 12-month horizon. If you were just thinking about, you know, just like trading an individual stock punting the market, sometimes that is not gonna get you the return you are hoping for.
stand a good chance (of) v. 很有可能, 大有希望
exchange market 外匯市場
market capitalization 市場資本總值，市場資本總額，市值
liquidity 流動資金
hot money n. (為追求高額利潤而流動的)短期流動資金
