Worst may not be over for Asia, says Citi's Rosgen

MUMBAI: Next year will be the beginning of a U-shaped global economic recovery, with growth rates for all major countries starting to look up again. One area which will continue to be a drag on growth is the global consumer, said Markus Rosgen, MD and Regional Strategist, Asia-Pacific Equity Research of Citigroup. Mr Rosgen feels that the worst may not be over for Asia, yet.

"Export growth in Asia is falling anywhere between 20% and 40% today. India is an exception, elsewhere you have PPI (producer price index) in the negative. So, the risk analysis and expectations are a little ahead of the ability of the stock market and the corporate sector to deliver," he said.

On Wednesday, BSE's 30-share Sensex ended at 14422.73, up 98.72 points, or 0.69%. NSE���s 50-share Nifty closed at 4292.95, up 45.95 points, or 1.1%. These indices have risen nearly 70% in the last three months, making India one of the best performers in Asia.

Over the next 5-10 years, Mr Rosgen predicts that there will be a lot more M&A activity from Asia to the US and Asia to Europe. He expects Asia, and within it India, to leverage its efficient banking system to position itself successfully through acquisition of more distribution networks, brands and R&D.

"By and large, when you look at India and the region, there is a complete lack of brands. Global brands or even Pan-Asian brands. If you look at the top 100 brands worldwide, only three are from Asia and all three are Korean companies. To my mind, over the next 5-10 years, Asia will use the fact that its banking system is fully functioning, the corporate sector is very underleveraged(so corporate balance sheets can take on debt), the banking system can provide capital to corporates, and Asian corporates are going to begin to venture overseas," he reasoned.