Asian stocks surge 137% in just under six years
Calling the top in financial markets is never easy. Asian stock and bond markets may appear frothy at their near-record levels after a multi-year rally, but global investors are still betting on a mix of healthy returns and history to juice up their profits.
Six years since the global financial crisis spurred a relentless pursuit of yields, Asian stock markets are at record highs, bond yields have tumbled to pre-crisis lows and companies are raising huge amounts of cheap equity and debt.
Brisk corporate earnings growth, fed by a global thirst for the region's exports of cars and electronics goods and robust domestic consumption, has further burnished
"I would not at all subscribe to the idea that markets are expensive and now's the time to get out," said
"And if you do that, you are going to be potentially losing out on some very compelling opportunities for growth in the next three to five years and possibly longer, particularly in
Indeed, triggers for a correction, which seems overdue, have come and gone — ranging from geopolitics such as the
Other regions have cooled off in the past two months. There were outflows from US high-yielding bonds and equity funds, European equities have fallen sharply, and foreign cash has moved away from Latin American and European equity markets.
Asian stocks are up 137 per cent in just under six years. Equity markets in
Earnings have spurred much of these heady gains, underwritten by an economic recovery led by domestic consumption and, more recently, exports. Second quarter earnings have so far on average been growing at 25-to-30 per cent over the previous year.
And despite a slowing in
"You have to look at what earnings growth companies have delivered. And earnings in
No one's sure what will touch off a correction or even which part of the market will sell off first.
"We know that at some point the party is over but as a portfolio manager you are paid to look for opportunities for your clients,"
One likely trigger would be a spike in US yields, possibly in early 2015 in anticipation of a rate rise by the Federal Reserve, which would cause high-yield Asian bonds to be sold. Even there, the high-yield market in
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