Mainland growth set to steady
China's warp-speed growth may be about to encounter a little turbulence, with GDP expansion forecast at just 7.5 to 8 per cent next year, according to Baring Asset Management (Asia).
Those numbers are significantly down from this year's heady GDP expansion estimated at 10 to 12 per cent on an annualised basis.
Baring's head of Asian equities, Khiem Do, believes concerted mainland government efforts to slow the economy down in the face of soaring real estate and commodity prices should take hold by early next year.
'China is the one country which is going to see a deceleration of growth in the next six to nine months, but the rest of Asia will show a recovery,' he says.
This somewhat muted outlook for China next year runs contrary to last month's mutual funds performance figures, with Greater China equity funds leading 17 sector groups with an average gain of almost 11 per cent for October. Following close behind were information and technology equity funds and Hong Kong equity, both registering a 9 per cent gain, followed by Asia Pacific single- country equity funds at 8.5 per cent.
The performance caps a bullish month for all Hong Kong-registered equity funds, with average returns of 6.9 per cent, according to the Lipper FundMarket Insight Report.
Mr Do says the across the board gains were driven by overall rising confidence in the region, low interest rates and growing fund flows.
'The problem with Asian liquidity is that there is too much of it,' he says, forecasting little immediate change in his bullish outlook for the region as a global cyclical recovery takes hold.
Potential US dollar depreciation should end up helping Asian economies, whose currencies tend to shadow US exchange rates, he says.
Alex Boggis, head of the Hong Kong office of Aberdeen International Fund Managers, is bearish on the Asian region, at least in the short term.
'The prices have run up too high and its not on the back of fundamentals, it is on the back of sentiment and a large amount of money, so there is a certain amount of momentum involved,' he says. 'I think it would be healthy to have some sort of correction phase.'
Despite his concerns, Mr Boggis says his outlook on the market has improved since the summer, when the markets looked substantially run ahead compared to fundamentals.