Wednesday, January 12, 2005
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The other night on CNBC Asia they had Adrian Mowat, chief Asian equity strategist from JP Morgan giving his outlook for 2005. His two favorite Asian markets are Taiwan and Thailand. I wrote about Thailand before so I'll focus on Taiwan in this post.
One of the reasons Mr. Mowat likes Taiwan is that he expects good things for US markets in a kind of contrarian call. He expects tech spending to be robust in 2005. Taiwan is a very tech heavy market. I would a agree that what is good for US tech is good for Taiwan. It is not clear to me that tech spending will be robust in 2005. The accelerating depreciation that expired last year was not enough to cause a serious lift in stock prices and now that little tax perk is no more.
I have written before that a flatter yield curve favors growth over value. That does not mean growth will go up 20%. I have increased exposure to growth for client accounts but I have only added one tech name. Where I have added some growth is gaming, consumer and non-big-pharma healthcare.
Intel's capex numbers last night anecdotally refute my idea but I just don't think tech spending will be huge this year. I could be wrong but think it will easier to get good emerging market returns with out relying on a tech spending turnaround.
To give you an idea about how tech heavy Taiwan is; 50% of the iShares Taiwan (which is meant to mimic the Taiwanese market) is in technology. Tread with caution.
Posted by Roger Nusbaum at 6:07 AM