Beyond The Correction, Healthy Fundamentals Should Prevail

The current correction in Asian stock markets is likely to prove sharp, but relatively short-lived, in BMI's view. As we have been arguing since December 2006, the steepness of regional equity gains was unsustainable, and that a correction in share prices in China, India, Indonesia, the Philippines and Vietnam has been overdue. While we expect to see further losses in the near term, it is important to remember that a combination of strong growth, low inflation, and a downward trend in interest rates in several economies should ensure that equities recover and resume their long-term uptrend.

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