Chase Asset Management sees a pull-back ahead in Asian markets and has been reducing its weighting in Hong Kong, according to its head of Asian Equities Funds Management. David G. Webb said that after a strong Asian rally many markets had reached fair value. 'At these levels we are extremely cautious from here. From a technical view point they look over-extended,' Mr Webb said. He warned that troubles in Russian and Brazilian markets could have an important impact in Asia. Mr Webb said that the global fund manager had been reducing its weightings on the Hong Kong and Thai markets, on which it had previously been overweight, over the past few weeks. Chase's global chief investment officer Mark Richardson said the house was overweight on European markets, but underweight on the United States, Japan and Southeast Asian markets. 'Equity markets are in trading ranges essentially, and at the top end of those trading ranges at the moment,' Mr Richardson said. While the fund manager did not see a US recession emerging, the earnings outlook for next year remained flat, he said. The earnings outlook in Europe was stronger than in the US, Mr Richardson said, adding that the Dow Jones Industrial Average was unlikely to break back through the 9,000-point level and could head back to 7,500. 'The US market is expensive, but having said that, we see big opportunities in small-cap stocks and a lot of opportunity in value [stocks],' he said. The US economy was likely to grow only 1.5 to 1.75 per cent next year and there was a 50 per cent chance of another interest rate cut this month, he said. Chase Asset Management's global strategy for next year is to be overweight on cash and underweight on stocks, compared with industry benchmarks.