Hong Kong – While the region’s economic woes have been thus far precipitated by events in the West, analysts have highlighted rising inflation as a key Asia-specific problem moving forward. Recent analysis from Hong-Kong based Media Partners Asia (MPA) says that high inflation, impacting both corporate profitability and household consumption, will impact ad spend. “All this means it remains too early to predict the recovery in Asian equity markets and depressed media stocks, and, though ad spend growth will remain robust in 2008, there will be downgrades in 2H 2008 and more material softening in 2009,”says the report. MPA have revised down their estimates for Asian ad growth to 7.2% from an earlier 7.9%, with estimates for much of Southeast Asia, China, India and Australia reduced. Their analysts also say that media stocks are among the worst hit in depressed equity markets. Net foreign buying of equities in Asian markets reached US$115 billion in previous years, compared to sales of only US$60 billion since October 2007. (But) “There is a case for a recovery rally, as markets have fallen hard and valuations declined, sentiment is bearish and fund managers are once again looking at buying depressed Chinese and Indian media equities,”say MPA.
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