JF Asset Management, part of JP Morgan Fleming Asset Management, is reasonably upbeat about the immediate future of the world economy, with one or two reservations. In particular, the group is bullish about the prospects of Asia ex- Japan, says Geoff Lewis, head of investment services. 'The region we like the most is Asia ex-Japan. That is because Asia will benefit from the perception of a recovery in the United States economy and it doesn't really need that - people have underestimated the extent to which Asia is now its own biggest market. It is the only region which has got China as an intra-regional growth driver,' Mr Lewis says. 'We are very positive on that. It is having a tremendous effect on a lot of companies in Korea. It is well known that Taiwan is more closely integrated than ever, but it is also having an impact on Japanese companies such as exporters of machine tools and precision equipment.' He says prospects for the US economy are solid in the short term, although there is some doubt about whether US companies are going to be able to transform what has so far passed as a recovery into greater employment. This would make the recovery more sustainable. 'It is quite clear now that growth for the second half for the global economy is surprising on the upside,' he says. 'We have seen that very much in US data, we have seen it in the Japanese data. In Europe we have so far only seen it in the soft data - the business sentiment, but at least it has stopped deteriorating. So investors have built strong growth into expectations. 'We are still somewhat sceptical on whether we are going to see a strong recovery continue [until the end of] 2004 in the US but, for now, markets are going to run on the stream of good news on the economic front. That is going to continue for a while because the tax cuts are not going to start to fade until the first quarter.' Mr Lewis says one of JF's concerns would be a reversal of the trend for US homeowners to raise equity on their homes to spend. The recent rise in US bond yields has made such deals far less attractive. Chief investment officer Piers Litherland says in JF's September Global Outlook, that Asia has reached a 'clear turning point'. He says prospects for Asia centre on growth in China, 'although a strong US recovery will, of course, provide additional strength. Either way, Asia is in shape to outperform.' Mr Litherland says that, although some Asian markets seem overbought and therefore liable to a short-term technical correction, 'the medium-term outlook remains sound. Indeed, one can argue that Asia has rarely been more favourably placed at the start of a global upturn', with low stock prices, demand for Asian technology picking up and the end of the Sars (severe acute respiratory syndrome) crisis. In a recent Investment Alert, Chung Man-wing, the head of JF's Greater China team, pulled no punches in his outlook: 'The Greater China region has moved to centre stage in Asia. It offers investors the most exciting opportunities since the railroad boom opened up the US 150 years ago. 'Those who have not already added Greater China to their global portfolio in order to enhance their potential returns should do so at the earliest opportunity.' He continued: 'Investors ought to be aware of how the entire Asian region is currently benefiting from China's impressive growth. 'A new term - 'China Harvest' - has been coined to encapsulate this very positive trend. China's robust demand for its neighbours' goods is helping to spread this new wealth generation across Asia.'