Hong Kong, Aug 30: Politics will help to shape portfolio investment allocations within Asia over the next 12 months, as governments from India to Indonesia prepare to hold national elections. “Everywhere in Asia, politics is becoming a bit more critical,” said Nilesh Jasani, regional equity strategist at HSBC. “You have imminent elections in places like India, Indonesia, the Philippines and Taiwan. Political risk is somewhat rising. I mean it’s not going to lead to people pulling out of Asia but, within Asia, it could certainly lead to a reallocation,” Hong Kong-based Jasani said.
India is scheduled to hold national elections in ’04 and polls in key states later this year. The Philippines, where the dust is just settling after a failed mutiny by renegade soldiers, is due to elect a new President in May next year.
Malaysia will see long-serving Prime Minister, Mahathir Mohamad, step down later this year, while Indonesia will hold parliamentary and presidential elections in ’04. Singapore’s Prime Minister, Goh Chok Tong, has said he will make way for his successor, deputy prime minister, Lee Hsien Loong, once the economy recovers from a downturn. Taiwan will elect a new President in early ’04.
Analysts say conservative investors could look for political safe havens such as Thailand, which is not facing elections or a change in leadership next year. But braver souls may venture into markets where elections are likely to be held to reap possible benefits from pre-poll spending by incumbent governments. Bureau Report