BNP Paribas downgrades China, Korea equities; upgrades India, Indonesia

MUMBAI Wed Feb 26, 2014 5:06pm IST

A broker monitors share prices at a brokerage firm in Mumbai August 9, 2011. REUTERS/Danish Siddiqui/Files

A broker monitors share prices at a brokerage firm in Mumbai August 9, 2011.

Credit: Reuters/Danish Siddiqui/Files

Related Topics

Stocks

   

MUMBAI (Reuters) - Chinese and Korean equities have been downgraded to "underweight" from "neutral" and "overweight" respectively by BNP Paribas in its Asia Ex-Japan portfolio, citing a structural slowdown in the former and margin pressures on the latter.

"Since mid-2013 we have recommended investing in North Asia. This call worked in 2H13, but since the beginning of 2014 concerns have emerged over China and over Korea. The only silver lining for China seems to be the relative resilience of its consumers," said BNP Paribas in a report on Wednesday.

China's authorities have a tough balancing act as they try to rein in credit growth, implement structural reform and maintain reasonably high growth, BNP said.

The investment bank also upgraded Indian and Indonesian equities to "overweight" from "underweight" by increasing its positions primarily in rate-sensitive stocks like banks, and India's largest cigarette maker ITC (ITC.NS).

India and Indonesia, previously at risk from severe currency depreciation and liquidity tightening, have recovered in terms of their trade and current accounts, and to a lesser extent in terms of inflation, the BNP report added.

Weak currency and high imports had earlier put a strain on the two nations among "the fragile five" by widening their current-account deficit.

Macquarie also reduced its "overweight" stance on Korean equities and reduced its "underweight" on Indonesia on Tuesday.

Last week, JP Morgan upgraded Indonesia and Philippine shares to "overweight" from "neutral" in its global emerging markets model portfolio, citing a reduced perception of risk due to stability in some currencies and improving current accounts

(Reporting by Abhishek Vishnoi; Editing by Sunil Nair)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Press Event

Press Event

Modi takes tea, but no questions, in first press event as PM.  Full Article 

Monetary Policy

Monetary Policy

Finance Minister Arun Jaitley favours interest rate cut - paper  Full Article 

Sundar Pichai Elevated

Sundar Pichai Elevated

Google's Pichai to oversee major products and services.  Full Article 

Reuters Poll

Reuters Poll

India's growth pace to pick up as reforms draw investment   Full Article 

Need For Reforms

Need For Reforms

Euro zone risks "relapse into recession" without structural reforms - Draghi.  Full Article 

Diwali Sales

Diwali Sales

Gold sales jump about 20 pct for Diwali - trade body  Full Article 

World Bank Rival

World Bank Rival

Three major nations absent as China launches W.Bank rival in Asia  Full Article 

Health Of Lenders

Health Of Lenders

25 European banks set to fail health checks - sources.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage