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Mkts to rally throughout 2009: JP Morgan

Published on Tue, Mar 31, 2009 at 09:36 | Source : CNBC-TV18

Updated at Wed, Apr 01, 2009 at 13:46

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Adrian Mowat, Chief Asian & Emerging Market Equity Strategist, JP Morgan

Excerpts from Bazaar on CNBC-TV18 Watch the full show »

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Adrian Mowat, Chief Asian & Emerging Market Equity Strategist at JP Morgan feels that investor sentiment still bearish and said that emerging markets would trade flat this quarter. However, he expects markets to move higher throughout 2009, especially Asian markets as its fundamentals are comparatively stronger. He added that Asian emerging market were more flexible as compared to European emerging market where there are structural issues.

On the Indian election, Mowat said that the market expectation for Indian political scene was very conservative. He added that it would be difficult to develop a strategy around elections in India but he does see room for an upside surprise in India.

The Reserve Bank of India is likely to push rates to 4% and that will help growth, he said.

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

Q: Put the current rally into perspective for us from what you have seen across Asia. Stock prices have rallied but has confidence returned among investors that you speak to?

A: I think people have still a very recessionary bearish bias in their thinking. This is why you are seeing markets performing relatively well on the marginal good news flow and being less sensitive to the negative news.

Emerging markets (EMs) will be flat this quarter, not up. US markets will be down double digits by the time we close today. The European and Japanese indexes in US dollar terms are down nearly 15% this quarter. So, yes we have had a good rally off our March lows. But we haven't really made up for the losses that we had achieved in the first two months of this year. I think the markets will be moving higher throughout 2009, in particular the Asian markets where you have got less structural issues than you find in developed markets and you have now got some extraordinary tail winds, whether it is monetary policy, fiscal policy, the terms of trade in the case of Korea a very competitive currency, these are all good factors that tend to drive an acceleration in economic activity which is ultimately what stock markets react to.

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