Mumbai: The recent global market stock rally has brought on plenty of skeptics, who remain unconvinced the uptrend is here to stay and have cautioned investors to stay away. Still, there are a number of analysts in the bullish camp who say markets have been overly negative and are forecasting better times ahead.
Greg Bundy of Sydney based financial advisory firm AIMS Finance says markets have "got it wrong" in the last few months by incorrectly factoring in a Greek default, a US recession and hard landing in China.
"What we see now is a manageable restructure of Greek finances, the US although not racing ahead, growing about two and a half per cent and... China [is] by no means [facing] a hard landing," Bundy told CNBC on Monday.
While Bundy accepts that Europe`s debt crisis remains a concern, he believes positive factors outweigh the risks.
"Europe, it`s still work in progress...about the re-cap of the European banks, 150 billion dollars has to show up from somewhere, so you know there`s still a lot of questions around there. But overall, I think we`ve passed the darkest part of the storm, there`s a light at the end of the proverbial tunnel, and I`m actually quite optimistic about 2012.
Sailesh Jha, Head of Asia Market Strategy at SEB Bank Singapore believes markets have underestimated growth in the US economy. He says the recent third quarter GDP data which showed the world`s largest economy growing 2.5% - the fastest pace in a year - was encouraging.
"The data is panning out to the idea that the fourth quarter in terms of GDP in the United States should probably be stronger than what we saw in the third quarter, pretty much led by consumer and investment spending, which was evident in the third quarter data release," Jha highlighted.
Bundy concedes that the high unemployment rate in the US remains the biggest challenge to market sentiment. The monthly non-farm payrolls report due at the end of this week is widely expected to show the country`s jobless rate staying at a 9.1%. Bundy says once the employment picture begins to improve, equity markets should get a further boost.
"9% seems to be a stubborn number for America, but I think once it breaks through that psychological level, I think you could see another uplift in markets," he said.
Large Caps and Currencies
Bundy`s list of favorite stocks includes big cap names like Disney, which he describes as a "fantastic franchise," and UBS.
"UBS, despite its difficulties over the past few months...is a wonderful brand. And just a reminder... [it has] 18% tier 1. Most banks in the word have 8-9. UBS is over 18," Bundy said.
He also likes Amazon, even as the shares got slammed last week over the company`s plans to expand infrastructure spending. "Jeff Bezos is a wonderful manager....i f you`re going to get penalized for growing your business and putting infrastructure, so be it," Bundy said.
With risks from Europe contained for now, SEB`s Jha recommends loading up on Asian currencies like the Korean won, Indonesian rupiah and the Singapore dollar.
"The worst in growth conditions in Asia would be materialized in Q3. Q4 would see a very nice rebound including the Chinese economy where people have been, frankly speaking, too bearish," Jha said.
Further, the positive growth data from the US "bodes well" for trade, growth dynamics and balance of payments for Asia.
"Throughout this whole crisis, we`ve continued to mention that fundamentally and looking at the outlook at the next one to two quarters, the outlook for Asian currencies is very, very bullish," Jha said.
Disclaimer: Bundy and his company do not own stocks in Disney, UBS or Amazon.
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