The aggressive fiscal and monetary stimulus policies by various governments in Asia is expected to boost the region's equity markets, including India, in the second half of 2009, says the Asian Development Bank.
"Aggressive fiscal and monetary stimulus policies should help strengthen the current rally and contribute to better equity performance in the second half of 2009," the lending agency has said in its report 'Asia Capital Markets Monitor'.
In recent weeks, the Asian markets had witnessed a rally, primarily due to rising hopes of an early revival for the global economy.
The ADB pointed out that even as mature markets are continuing to be hit by losses emanating from weak banking sectors, the Asian region is doing better on the back of "relatively resilient macroeconomic fundamentals".
"While mature markets continue to suffer losses arising from weak banking sectors, the region’s stock markets are beginning to benefit from the widening valuation gap on the back of relatively resilient macroeconomic fundamentals," the report noted.
According to the lending agency, the emerging Asian markets are India, China, Thailand, Taipei, Singapore, Hong Kong, Philippines, Malaysia, Indonesia and Vietnam.
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a's benchmark index Sensex had witnessed a rally from mid-March till the last week of April, during which the index touched the 11,000 level.
Many governments in the Asian region, including India and China, have come up with various fiscal and monetary initiatives to boost their respective economies.
"The region's (Asia) capital markets have large growth potential. Many of the region's economies also have sufficient financial strength to support necessary structural changes, and the region's financial systems have largely escaped the brunt of a full-blown credit crisis," ADB said.
On Tuesday, the Reserve Bank of India further reduced the cost of credit by slashing short term lending and borrowing rates by as much as 25 basis points.
In addition, the lending agency asserted that these Asian markets have room for further monetary easing and fiscal spending, given decreasing inflationary pressures and relatively healthy fiscal positions.
ADB said emerging Asian equities are favoured over the long term by other factors including demographic changes and a growing number of globally-managed funds seeking long-term investment opportunities.