Sees more downside risk for Asian equities: Bk Julius Baer

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Asian markets have opened sharply lower on back of Wall Street cues that tumbled more than 1% on Tuesday on fresh fears of credit related losses.

V Anantha Nageswaran , Head of Investment Research at Bank Julius Baer told CNBC-TV18 that he sees more downside risk for Asian equities because Asia so far he says, followed  a loose monetary policy and did not feel the impact of what was happening in the global economy but now that is in the pipeline.

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

Q: Again a day of red for the Asian markets- did the Japanese economy particularly in focus considering that the recessionary fears are playing their part?

A: Yes, I think you mentioned about some depressing cues unfortunately I am going to be adding to it with my negative outlook on Asian macro and the Asian markets.

I think because Asia has so far followed a fairly loose monetary policy, it has not yet felt the impact of what is going on in the global economy and that is something that is in the pipeline. So in that sense Japan's GDP numbers were merely a confirmation of what everybody had anticipated and so in that sense we do see more downside risk for Asian equities.

Q: Asia this time around is not even following crude which has cooled off, which in a typical case tends to add cheer to the market?

A: If the crude oil prices had dropped because of tight monetary policy then Asian markets would be celebrating that because that would herald a loosening of monetary possible and that is possible perhaps only in countries like India, which have half tight and considering the rest of Asia hasn't really tightened at all. So for them to celebrate the crude oil drop, they did not necessarily suffer the pain, when the crude oil prices were rising, so that is why there is no pay off on the drop in crude oil. Secondly it also perhaps signals a faster collapse in global demand.

Q: Further clues are also coming in the jobless claims data coming in, what is your sense, will we get better cues from US next time around?

A: I am afraid not because if one looks at the employment numbers the birth/death model of adjustment which basically provides for new businesses being created that has  been adding jobs to the US employment numbers making them look better than they are.

So statistical revisions are going to be on the downward side and I think we are going to see further pickup in the amount of job losses we see every month in the US as starting now.