Asian mkts to retest their year lows: Bank Julius Baer

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Asian markets have opened up fairly lower as financial stocks sink after their counter parts were battered on Wall Street on worries of further credit related damage to come.

V Anantha Nageswaran , Hd-Invst Research at Bank Julius Baer on answering a query whether Asian markets would retest their year lows told CNBC-TV18, "I think that is a very likely scenario for many Asian markets including India."

Excerpts from CNBC-TV18's exclusive interview with V Anantha Nageswaran:

Q: Your perspective on the Asian markets, Nikkei is down by 2% but Shanghai is quite volatile and it's now up by 1.5%?

A: We probably shouldn't read too much into the rally in Shanghai because across the board Asia is down and the Chinese market has been down for quite some time including yesterday, so I don't think China's market necessarily provides us any meaningful indicator of what's going on. It seems to be dancing to its own tune.

In general rest of Asia is moving in line with where it should be because expectation for growth in 2009, both for macro growth and earnings growth are still way too unrealistic and they have to come down and as they come down the equity markets would price the multiples accordingly.

Q: Is the cycle continuing of the credit market related losses, again do you see whole period of downturn for the Asian markets?

A: In a word the answer is yes. I think the US financial and household sectors both are still very vulnerable and other sectors of the credit spectrum would also begins to display stress and the US consumer has to rebuild savings from about 0% at least 5-6% of disposable income and that would also put a dampen around growth prospects both for the macro as well as corporate earnings number in the US, with echo's elsewhere in Asia.

Q: Technically speaking most of Asian markets have recovered about 15-18% from the year lows but given the kind of clouds that is still hanging over on their necks do you think they could test their year lows once again?

A: I wouldn't out rule that and infact I think that is a very likely scenario for many Asian markets including India.