Huge redemptions weighing heavily on mkts: Asia Pac AM

Published on Mon, Oct 20, 2008 at 08:26 | Updated at Mon, Oct 20, 2008 at 10:34 | Source : CNBC-TV18

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Asian markets were trading mixed. China's Shanghai Composite slipped 0.73%, or 14 points to 1,916.65, while South Korea's Seoul Composite declined 0.92%, or 10.91 points to 1,169.76, and Taiwan's Taiwan Weighted fell 0.45%, or 21.60 points to 4,817.04.

However, Hong Kong's Hang Seng rose 1.90%, or 277.01 points to 14,831.22, Japan's Nikkei advanced 0.53%, or 45.88 points to 8,739.70, and Singapore's Straits Times gained 1.17%, or 21.89 points, and traded at 1,900.40.

James Chirnside, CIO, Asia Pac Asset Management said, the big issue with stock markets globally, particularly Asia, is a massive round of redemptions in investment funds in North America and in Europe. He added that this was leading to wholesale liquidation, which is weighing heavily on prices.

Commenting specifically about the Chinese market, he said it would fall more sharply than what people are expecting. “We will see further easing on deposit requirements by banks in China. We will see a raft of new and quite radical measures to stimulate activity in China, “ he added.

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Here is a verbatim transcript of the exclusive interview with James Chirnside on CNBC-TV18. Also watch the accompanying video.

Q: Focusing specifically on China, are you expecting monetary easing coming in considering the weak GDP numbers which are coming at 9% and the weak industrial output numbers?

A: I imagine we will see further easing on deposit requirements by banks in China. I think we will see a raft of new and quite radical measures to stimulate activity in China because it looks to me as though China is going to fall more sharply than we are presently seeing at the moment, more than what people are expecting.

Q: It doesn’t seem like the bailout package announced by the South Korean government is holding up for the stock markets at least?

A: I think the big issue with stock markets globally at the moment, and particularly in Asia unfortunately, is a massive round of redemptions in investment funds in North America and in the European countries.

Last week, we saw something like USD 75 billion redeemed from mutual funds in the United States. Obviously the numbers in Europe are not as large, but there have been very significant redemptions in funds in Europe as well. That is leading to wholesale liquidation at any price of stocks, and that is heavily weighing on prices at the moment.

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