Analyst warns Asia on threats from a 9% risk to earnings in 2012

That is if earnings from a 1% lower G10 GDP growth where the base case is 2.4% becomes reality.

According to Morgan Stanley, visibility on the economic outlook is low.

Here’s more from Morgan Stanley:

The macro ‘What If’ scenario
Visibility on the economic outlook is low. We have asked our analysts to consider the sensitivity to earnings from a 1% lower G10 GDP growth, where our base case is 2.4%. For Asia ex Japan, our economist, Chetan Ahya, calculates this scenario would lead to 0.9-1.4% lower regional growth.

What’s the risk to earnings?
In aggregate, our analysts see roughly 9% risk to earnings – both for Asia ex Japan and Japan – in 2012 under our GDP growth scenario analysis. Six percent of stocks would likely see higher earnings, while just over 20% could see a more than 15% cut to forecasts.

What’s in the price?
Our GEMs strategist, Jonathan Garner, believes the market is discounting a 18-20% fall in AxJ earnings in 2012; in contrast, our bottom up analysts’ base case is for 18% growth. For Japan, our macro team, led by Robert Feldman, believe a 1% lower GDP coupled with a 0.5% drop of the global GDP deflator would suppress TOPIX returns by ~6.3%; the market is down 9.5% since 1 August.

Photo credit: Picture Perfect Pose

Also Read

NODX contraction eases to 9.3% YoY in April

DP Lawrence Wong seen staying on ‘same growth, policy path:’ expert

Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

I want to download the media kit