Investors should not write off Asia

BY most accounts, the global economy is on the mend so it should come as no surprise that most investment banks and stockbrokers are recommending that investors buy stocks in 2014. Equity valuations are said to be reasonable - at least relative to bonds - and earnings are forecast to be robust. Since central banks are not expected to start hiking interest rates any time in 2014, stocks should therefore do well. The big question is - which markets to buy?

The majority of expert recommendations favour Western markets, the main reason being that after five years of recession these economies are recovering and are possibly gaining upward momentum. Credit Suisse for example, expects US growth to rise from 1.6 per cent in 2013 to 2.6 per cent next year and growth in the eurozone to rise from -0.3 to 1.2 per cent. Schroders said it expects 8-10 per cent US earnings growth and an upside of 10-15 per cent for US large-cap stocks, whilst its positive view on Europe is based on diminished risks of a bank…