950807

Asian stock markets

seen in best position

for gains by year end

HONG KONG: Summer pauses in Asian stock markets are close to being over, opening the way for 30 to 35 percent gains over the balance of the year, said Alan Butler-Henderson, Director of regional strategy at Baring Securities.

He said stocks in Hong Kong, Malaysia and the Phillippines are the best positioned for gains through the end of 1995, with Thailand not far behind.

"The summer 'pauselet' has probably run 95 percent of its course," he said in a recent report. "Indeed, August could well rival May as one of the best months of the year."

He said Hong Kong's Hang Seng index should reach 13,000 by year end. Monday morning, it was down 45 points at 9,318.

Stocks in the Philippines, helped by a solid currency and growing liquidity, look set to match the expected performance in Hong Kong through the end of the year, he said.

In Malaysia, the stock market is set to climb by 30 percent by the end of the year, he said. It will be helped by a so-called smooth landing in the economy.

Thailand may have difficulty matching the second half performance of Hong Kong and Malaysia, but Butler-Henderson said he still sees a 25 percent gain in stocks there.

"Singapore is the poor cousin and will stay that way," he said in the report. "She could move up by 15 percent, but you should treat her as a source of funding for more dynamic deployment."

He also said Japan stocks have little upside hope.

"Japan equities are no place to be," he said.

A slight tightening of liquidity over the summer months has been the main cause for the flat trading in local bourses recently, but the tightening is likely to pass "in a flash," he said.

"Our SE Asia centres are an obvious lure, given our healthy corporate dynamic," Butler-Henderson said.

In Japan, continued rally in the stock market depends on a persistent rally in the bond market there. "It will be denied that pleasure," he said.

For equity markets in the US and Europe, the Barings strategist expects further gains over the next six months without a "significant" correction.

In the US, equity gains will be helped by continued willingness on the part of Japanese investors to commit money to US investments and an acclerating growth of dividend payouts, Butler-Henderson said.

"As for the European bourses, they may well match Wall Street's performance expressed in local terms through to the spring of next year," he said.

Japanese money will also help in Europe, as will declining inflation, he said.-Reuter