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Can Asia funds and tech protect the investors from slowdown?
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Asia funds in worry
Asia-focused fund managers fear the region's high inflation rates could help turn an impressive 20 percent rise in stocks since March into a classic bear market -- or "sucker's" -- rally in which shares dive to new 2008 lows.
Rising prices could force Asian central banks to take tough action such as raising interest rates or letting currencies appreciate, even as the fallout of the global credit crunch drags on U.S. and European growth and demand for Asian exports.
According to an Asian analyst which I am agree with,there are risks of stagflation in the West. That is not a good economic environment to be going into. And indeed we haven't really yet seen how much the economy is going to be impacted by this credit freeze. There's still a lot of risks out there.
Stagflation, which slammed Western economies in the 1970s, is a rare and unwelcome mix of rising prices at a time when growth is stagnant.
It is also time to avoid Australian banks, which it sees as more vulnerable to any renewed financial turmoil given their high ratio of loans to deposits.
Money managers said that while it appears the worst of the global financial panic may be past, Asian financial markets will have to grapple with a problem closer to home.
What is more important, more fundamental and more dangerous is that inflation in Asia has now come to a point where it is becoming worrisome.There is every potential for this problem to get worse from here, not better.
INFLATION UP ACROSS REGION
Data released this month showed inflation at multi-year highs of around 8 percent in regional giants India and China. And that was before China's worst earthquake in three decades stoked fears of further upward price pressure.
With food and fuel prices soaring, inflation also topped 8 percent in the Philippines and Indonesia warned of 9 percent inflation there. Even Japan, which suffered nearly a decade of deflation, last month reported inflation hit a decade-high.
Already this month, China has raised reserve requirements for banks and Indonesia hiked interest rates.
A look at tech industry in USA
Technology and media companies have weathered the global credit crunch but a wider U.S. economic slowdown poses a deeper test of their resilience.
After a round of first-quarter earnings reports, investors in companies such as IBM ,Intel , and Google heaved a sigh of relief, but the sector may have little time to regroup before facing its next major challenge.
The credit crunch has done most damage in the financial sector -- certainly an important customer group for suppliers of hardware, software and communications, but also a sector that cannot afford to fall behind in efficiency-boosting technology.
A slowdown in consumer spending, however, will ripple more broadly through the economy, and leaders of top technology, media and telecoms companies -- including a clutch attending the Reuters global TMT Summit next week -- have yet to convince that they will escape its effects.
When IT spending harder than usual and that smaller vendors would likely suffer most -- an opinion also expressed by several industry observers.
At the end of the day, the customer of every technology company is a consumer and the consumer is getting hurt. It falls back on the whole food chain.
Many industry executives, especially those outside the United States, reject this argument.
Those in sectors such as IT services or enterprise software argue their remoteness from the consumer protects them, while the nature of the goods and services they provide could even allow them to benefit from economic adversity.
In general, large providers of corporate software and IT services appear best insulated against an economic downturn and have sounded most confident.
The focus is definitely stronger on making the business case for an investment.
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| Tarih
: 5/19/2008 |
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© 2006 Mert TOKER All Rights Reserved. |
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