Aisa Outlook 2011

Several of them already in, more to follow. Will be adding to this post the different views:

1. Good discussion at MoneyControl with Jonathan Garner, chief Asian and emerging market equity strategist at Morgan Stanley :

The bigger story is not so much funds flow between different countries in Asia and emerging markets as maybe funds flow that could be heading out of Asia and emerging markets, back into the developed markets, particularly the United States where we are now expecting a 4% GDP growth next year

India, he says, is more vulnerable to higher deficit and, therefore, he has turned underweight from equalweight on India. Garner says corporate governance is the key reason for the recent contraction in prices. Hence, most FIIs are concerned about the price contraction in India. He also adds that higher crude prices are a headwind for emerging markets and he sees a divergence in demand growth within energy and materials.

Their sector view: We like sectors in markets that are more oriented towards the US. So the tech sector certainly has some positive features in that regard. We are also looking heavily at the mid to late cycle sector outperformers which in rising inflation and rate environments tends to be energy and materials. Upstream energy names particularly, in oil and coal. Those are areas that we like across Asia

http://www.moneycontrol.com/news/fii-view/morgan-stanley-underweightindia-sees-lower-fy11-nos_505992.html

2. CLSA expects Indian markets to decline in 2011: The money apparently is going away from emerging markets to the US. Russell Napier, Strategist, CLSA in an exclusive interview with CNBC-TV18 says, he sees more upside in the US markets.Napier further said he was cautious on emerging markets asset prices. “The authorities in the EM will be watching like a hawk for asset prices inflation and trying to keep that in an orderly fashion. As equity investor, that’s the real reason for caution rather than just inflation per se.”

http://www.moneycontrol.com/news/fii-view/clsa-expects-indian-mkts-to-decline-next-year_506330.html

3. ET Now intereviews DSP Blackrock: http://economictimes.indiatimes.com/opinion/interviews/banking-stocks-to-lead-the-rally-overweight-on-pharma-anup-maheshwari/articleshow/7149786.cms?curpg=1

India suffering from policy paralysis at this point , important that that solves itself early into the year.

The budget is not as important an event as the fact that it should just go through relatively smoothly.

Apart from that, things like the macro headwinds on oil prices, interest rates, inflation etc.

Top 2 Themes for 2011:

• Capex: very interesting with cycle in the later stage of investment. Capital goods space.
• Media: Some degree of deregulation may help, people particularly in the distribution space and media. Albeit a very small one.

Other pointers:

• Power: Huge macro headwinds - environment, fuel supply, coal, pricing power, Not the healthiest. Good overall for the economybut may not be as robust for growth.
• Pharma: Good long term defensive sector with a fair degree of growth attached to it, so makes sense to stay invested with high quality names.

more to come