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SINGAPORE: There is now less optimism over the green shoots theory, with more market watchers warning it may not happen so soon.
While recent global economic data has improved, experts say it could be temporary as companies are merely restocking their inventories.
And some analysts are playing it safe by backing larger Asian economies like China and India, due to their large domestic economies and the growth drivers in place.
The analysts say things are expected to turnaround only when US home prices have bottomed out. Some experts project this will happen in the second half of the year with room for about a 10 per cent drop.
Head of investment strategy in Asia, HSBC Private Bank, Arjuna Mahendran, said: “Countries like Singapore, which have really been battered in this recession because of its huge dependence on the export sector, could also see a spectacular recovery once the global economy finally recovers.
“And to that extent I would tactically look at the smaller trading economies such as Hong Kong, Taiwan, and Singapore in the recovery phase, where the upside is much stronger once that recovery is definitely underway.”
Although current valuations across many Asian markets are not as attractive as before, experts say the widely anticipated correction could give investors a chance to enter the market.
Executive chairman, NRA Capital, Kevin Scully, said: “I think the risk reward is against you. I think if you want to come into the market now, you're probably better off waiting. I'm beginning to see there are actually no green shoots, there is only a slowdown in the rate of decline in the macro economic numbers.”
Some observers are expecting global equities markets to see a correction of about 10 to 15 per cent over the next few months.
With the market still showing signs of volatility, some experts say it is an opportunity to profit through the trading of options.
For less aggressive traders, experts recommend that they get solid and stable returns through high grade corporate bonds.
- CNA/yt
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