That world has long gone. Risk aversion, as measured by HSBC's CLOG Index, is off its late October peak, but only fractionally so. Recession has already claimed some economies, including Singapore, and more will follow. Foreign funds are still liquidating positions and fleeing for safe havens. The terrorist attacks in Mumbai, and the siege of Thailand's main airport have reminded the world that Asia is anything but a safe haven. Governments and central banks have been unable to turn the tide. At least half a dozen fiscal stimulus packages and a swathe of interest rate cuts have barely registered with investors
Undeterred, some bulls spy a floor to Asian equity markets. Asian companies in general have less debt than their western peers. Corporate earnings should benefit from lower borrowing costs, tax relief (as part of the fiscal measures) and cheaper oil and other commodities. The consensus is for MSCI Asia-Pacific ex-Japan earnings to increase almost 6 per cent next year. On current numbers, stocks certainly look cheap. The forward price/earnings multiple, at 8.7 times, is back at 1991 levels. Alas, continued selling suggests this offers little enticement. The bottom line is simple: when the world is sickly, investing in companies that depend on expanding global demand is bold.