For Asian mkts focus should be on headwinds: Julius Baer

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Asian markets are not picking up cues from Wall Street . There are concerns on whether the bailout package which will be of any good or not.

Speaking to CNBC-TV18 Nimeesha Takalkar , Equity Research Asia at Julius Baer said, ". For the Asian markets and for India in particular, we need to focus more on the headwinds than look out for any tailwinds at this point in time."

The bailout package may remain focused on putting a floor on certain asset prices but the larger question remains on whether it is going to be able to trigger off domestic consumption says Takalkar.

Here is a verbatim transcript of the interview with Nimeesha Takalkar on CNBC-TV18. Also see the accompanying video

Q: Just wanted to specifically focus on China where they have approved short selling in margin lending to develop the market. What is your opinion on Shanghai for the short-term and long-term?

A: I don't cover the Shanghai market I will not comment on it specifically but just to give a general overview. What we see is a negative reaction to the skepticism that comes from the top. The bottomline is basically consumer spending has to really to kick off to find any relief in the near-term and when US is already negative- sayings how that trigger factor will come into play is yet to be seen.

For the Asian markets and for India in particular, we need to focus more on the headwinds than look out for any tailwinds at this point in time. When I say that I mean that we find 15% is the estimated earnigns growth from this point in time and we all feel very euphoric that this has been brought down from the earlier 20% but that bring down has been because of cost pressures. We are yet to factor in earnings downward revisions, which comes from topline growth slowdown and this would be triggered due to two factors; one would be the domestic consumption is beginning to slowdown and second is because of export growth might see a deceleration if the slowdown is at the macro level.

In light of this, when we looked at technical charts and we see 12,500 as a floor but whether there are any reasons for euphoria, I am not too sure.

Q: The sense on the street or the mood on the street seems to be that of the tug of war situation because there is one faction of analyst fraternity who do believe that the bailout package is not very convincing enough and it may not do as much good as it is projected to be?

A: The bailout package may remain focused on putting a floor on certain asset prices but the larger question here is whether it is going to be able to trigger off domestic consumption? And until that does not happen, until the backlog of housing does not get cleared what would be the reason for euphoria?
Until crude oil prices do not see a sustained low- where is the euphoria for inflation being under control? Commodity prices are dipping low but we need to see this happening across the board and at a sustained level before we see domestic consumption picking up and that is going to be critical to any economies detrimental at this point in time.