This note looks at the strategic outlook for Asian shares relative to other global equity markets. The key points are as follows:

– Asian equities have fallen sharply on the back of the global financial crisis reflecting the vulnerability of Asia’s export markets, the exit of foreign capital and the impact of earlier monetary tightening.

– The slump in Asian export markets is clearly a negative and will cut sharply into Asian growth rates this year.

– But Asian equities are likely to be out-performers over the next five to ten years reflecting reasonable valuations, the lack of debt in Asian economies, stronger financial systems compared to the US and relatively favourable demographics.

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