Asian Equities Attractive On Rate Hike Fear – Mitsui Credit Global

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According to Mitsui Credit Global, December US interest rate hike jitters have created attractive opportunities in Asian stocks.

The firm says it potentially sees considerable upside potential once realization sets in among overseas investors that rate hikes are either not coming or are likely to be limited.

The heightened expectations of an increase in US interest rates that have dogged Asian equity markets for much of the year have created exceptional value across a number of Asian equity markets according to Japan-headquartered investment boutique, Mitsui Credit Global.

The firm’s penultimate client newsletter for 2015 makes a number of forecasts for the coming year including the reversal of what it calls the “repatriation trade”, where investors in advanced economies have sold assets including Asian stocks and bonds, bought dollars and brought their capital home in anticipation of marginally higher interest rates in the United States.

“We’re not convinced there’ll be a rate hike in December but, even if one does materialize, we expect it to be ‘one and done’, meaning the Fed won’t have enough room to do another. We very much expect sentiment towards the US economy to turn in the coming months so we’re advising clients to ‘back up the truck’ and load it with equities,” said George Cole who heads Corporate Trading at Mitsui Credit Global.

The Mitsui Credit Global conviction buy list has been revised to reflect a greater weighting towards the insurance and banking sectors in China, Thailand and Indonesia, countries it says are either adding or intend to add stimulus in order to boost economic growth.

The firm says it potentially sees considerable upside potential once realization sets in among overseas investors that rate hikes are either not coming or are likely to be limited. “Mitsui Credit Global doesn’t see US rates even reaching 0.5%; sooner or later others will come to share that view and the quest for returns will resume,” explained Cole.

Contact Mitsui Credit Global:
+81 645 604410
http://www.mitsuicredit.com

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