Belfast Telegraph

Are Asian markets still set for boom in 2011?

It has almost become a cliché to talk about the boom in Asian markets. It has been possible to watch live share prices in the area increase day by day, but analysts appear to expecting a decrease in some Asian markets and an increase in others. Whether this forms part of an overall upward trend appears to be difficult to predict.

Economists at Reuters have predicted that Asia will see strong growth towards the end of this year but that this may be compromised by the faltering economies of both the US and Europe during 2011. The results of a poll of 13 countries found that a slowdown has begun in the US and Europe which will result in slower industrial growth in all parts of Asia. Demand for Asian exports could be set to fall, according to the report.

Economist Professor Robert Prior-Wandesforde, from Credit Suisse, commented on the findings and suggested that the slowdown could be abrupt and surprising.

Projected growth in Asia has been put at 8.4 per cent for 2011, compared to ten per cent growth in 2010. The Reuters report went on to suggest that Asia relies too heavily on demand from foreign markets.

This slowdown has been highlighted by recent results from Samsung, which showed that the manufacturer had weaker than expected third quarter earnings and that its share value had fallen by 2.9 per cent. This is the biggest one day fall the company has experienced since May.

While it appears that industrial growth may be slowing in Asia, other sectors of the continent's economy are set to continue to boom.

The Reuters poll also revealed that Asia has seen an increase in drug research and development as international firms increase their investment in the area. It seems that Asian pharmaceutical companies are seeking to manufacture their own drugs rather than simply providing raw materials to foreign drugs companies.

It has also been suggested that a property boom in Asia could be the saving grace of the area. Jonathan Anderson, the managing director and global emerging market economist at UBS, pointed out that demand for property, particularly in China, is on an upwards swing and that the sector has seen a 135 per cent increase in the past decade alone. He went on to say that the emerging markets are likely to be successful regardless of what is happening elsewhere.

This uncertainty is leading to caution from investors in Asia. Research from Boston financial firm Celent, on behalf of Celest, the Indian financial services group, revealed that growth in Asia has increased by 20 per cent in the past year, mostly fuelled by an eight to ten per cent growth in Chinese and Indian markets.

Despite these impressive figures, investors are still searching for products that offer them more security. Celest's Arin Ray has suggested that Asian firms need to adapt to the technology standards expected by the rest of the World to offer a better service.

The slower growth rate predicted for Asian economies next year needs to be put into perspective, for Asia has witnessed spectacular growth over the past few years. Any slowdown is likely to pale in comparison to the meagre projected growth rates of the developed World.

Belfast Telegraph