International | Jul 07 2006
By Terry Hughes
A few weeks ago analysts at ABN Amro predicted Asian markets were likely to experience a bounce, and they recommended investors sell into that bounce.
Well the bounce has certainly eventuated and now Credit Suisse has joined in the call, questioning whether investors may be better off selling the bounce.
The expectation of further interest rate hikes across the region are predicted to "cap the bounce" and the impact of higher rates could result in "substantial downgrades" to earnings forecasts, Credit Suisse says.
The analysts point to the "unprecedented withdrawal of liquidity" from three of the world’s largest central banks as also supporting their view that the current rally is unlikely to run.
With this in mind, Credit Suisse is cautious on the outlook for Asian region equities this quarter.
