Asia to benefit most from US recovery, says CLSA’s Morrison

Asia will be the first to benefit from a recovery in the US economy, with possibly India and certainly China being likely "bright spots" for multinational companies, according to the outgoing Asia-Pacific chief of global brokerage firm CLSA. However, he cautioned that the recession in the developed economies has not bottomed out yet.

In an interview to the Forbes magazine, Rob Morrison, who retires as chairman of CLSA Asia-Pacific Markets this week, said the recovery will come next year. "You will probably start to see a turnaround in the US economy around late 2010. Asia will be the first beneficiary of that. Growth will more accelerate quickly here in Asia than it will in the US."

"Liquidity is starting to free up globally, so ultimately, people looking for investment returns are going to be drawn to Asia again," he said. Asked where growth for companies would come from in the long run, he said, ''Hands down, Asia.''

About India, Morrison said that general elections in the country were huge boost, adding that "India is the sole economy in Asia that is not export-dependent". He said China was also poised to take advantage of an upturn in the US economy, with eight per cent growth ''looking unbelievable'' compared to the US and Europe.

Morrison, a native New Zealander, retires after a decade at the company. Stepping into his shoes is chief executive officer Jonathan Slone, who will run the Hong Kong-based independent brokerage, investment banking and private equity group founded in 1986.

On the western economies, Morrison said, ''I don't think we've hit the bottom yet. In the US, unemployment is still rising and house prices are still falling. We've seen the worst in the US, but we haven't seen the bottom. In terms of the European economy, we certainly haven't seen the bottom.''

On Asia, he added, ''Asia can't escape the fact that Western consumers have stopped spending. Until such time as you see a turnaround in Western consumer habits, you can't see a recovery. Yet Asia doesn't have to deleverage like the US, so it isn't as badly hit. Asia comes out of this more quickly than anybody.''

Morrison added, ''You look at China and the stimulus package has really helped. They'll get 8 per cent growth. Next year is a trickier issue for them. They're clearly looking for some pickup from the US. You can't turn an export-driven economy into a domestic-driven economy overnight, and China knows that.''