Domestic inflows likely to keep market strong: Credit Suisse

In the last 3 months purchases by domestic mutual funds have more than offset foreign institutional investor outflows. It is tempting to assume that persistent domestic inflows into the equity market are likely to keep the market strong, Neelkanth Mishra of Credit Suisse says.

He further says, however, analysis of past market trends suggests that flows only temporarily impact prices.

Instead, changes to earnings estimates have a stronger influence, and on those we remain cautious, Mishra says.

Meanwhile, Jonathan Garner of Morgan Stanley says so far, emerging markets (EMs) equities are outperforming Japan this year after sharp underperformance in November and December 2016.

He expects EMs to return zero for the rest of 2017, but still sees 16 percent upside for Topix.

Currently, Garner is overweight on India, China, Taiwan, Chile, Peru and Czech Republic while underweight on Australia, South Africa, Singapore, Malaysia, and Qatar.