Newspaper article THE JOURNAL RECORD

Prospect of Asian Recovery Cheers U.S. Investors

Newspaper article THE JOURNAL RECORD

Prospect of Asian Recovery Cheers U.S. Investors

Article excerpt

NEW YORK -- Signs of better times for battered Asian economies have played a decisive role in the behavior of U.S. stock prices this spring.

Because Asia is looking healthier, investors have grown much more enthusiastic about prospects for U.S. companies whose fortunes are closely tied to the ups and downs of the business cycle in this country and worldwide.

As a result, those investors have been willing to shift some money out of traditional growth stocks and into cyclical manufacturing and commodity companies whose shares have languished for many months. "Asia is now on the mend," says Stephen Roach, global economist at Wall Street's Morgan Stanley Dean Witter. "As Asia turns, the global economy can only benefit. "In the pre-crisis years of 1996 and 1997, non-Japan Asia added as much as 1.5 percentage points to world gross domestic product growth. "According to our estimates, in 1998 Asia dragged global growth down by about half a percentage point -- a negative swing of about 2 percentage points. Courtesy of Asian healing, that swing is now about to reverse." The impact of these changing expectations has been most directly apparent in Asian markets themselves. Through the first four months of 1999, mutual funds that invest in Pacific countries have chalked up some of the best gains among all fund categories. The various Lipper averages of Pacific funds rose by between 19 percent and 24 percent over that span, recouping a big chunk of the losses they suffered in the past couple of years. From last fall's market lows in early October, they sport gains of 43 percent to 52 percent. But in a more roundabout effect, depressed categories of United States have fared almost as well as fears of a worldwide financial crisis have eased. From the end of a vicious selloff in early October through April 30, Lipper's average of U. …

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