India, smaller Asian economies to lead growth

TORONTO - Smaller Asian economies and India will lead in global growth in the next year, says an international survey of asset management, private equity and hedge fund executives.

The survey, commissioned by Toronto-based RBC Capital Markets, the corporate and investment banking arm of the Royal Bank of Canada (RBC) headquartered here, says global growth over the next year will be led by smaller Asian economies such as Hong Kong, Singapore and South Korea, followed by India and China.

The global survey was conducted by the Economist Intelligence Unit and involved 461 senior corporate and finance executives, including 108 asset management respondents.

Nearly 73 per cent respondents said the smaller Asian economies have better prospects for growth in the next year, followed by India (66 per cent) and China (65 per cent), Russia (51 per cent), Europe (43 per cent), North America (42 per cent) and Japan (27 per cent).

“Emerging markets have led global growth for the past several years, and asset managers around the world believe they will continue to do so. However, it is quite surprising that asset managers see smaller Asian economies surpassing China and India in terms of growth prospects,” said Marc Harris, co-head of global research at RBC Capital Markets.

“The emerging markets are more diversified than ever and are growing at different rates. Investors are recognizing the need to look beyond the four traditional emerging markets and are now looking to intra-regional differences in search for yield,” he said.

Taking into consideration the impact of the sovereign debt crisis, asset managers said they are optimistic about Asian equity markets, with 69 per cent expecting a rally over the next year.

But they were less optimistic about the US equity markets (54 per cent expect gains, versus 66 in the previous survey) and the dollar (53 per cent expect a devaluation, versus 24 per cent in the previous survey).

“The dramatic swings in sentiment captured by the RBC survey illustrate the ongoing volatility and complexity of economies and financial markets. Asset managers and investors are needing to be increasingly discriminating in their portfolio allocation, taking a more nuanced approach to investing, looking for alternative indicators and conducting appropriate analysis and risk management,” said Richard Talbot, co-head of global research at RBC Capital Markets.

Toronto-headquartered Royal Bank of Canada (RBC) is the largest bank in the country.

(Gurmukh Singh can be contacted at gurmukh.s@ians.in)