People queue at a Covid-19 test site at Mona Vale Hospital on December 18, 2020 in Sydney, Australia.
Jenny Evans | Getty Images News | Getty Images
Morgan Stanley is optimistic about Australia, India and Singapore.
The three countries stand out among those in Asia and the Pacific that have handled the coronavirus pandemic well, said Jonathan Garner, Asia and emerging markets director and chief equity strategist at the investment bank.
With the world’s reopening as coronavirus vaccines become more readily available, these countries are showing significant growth momentum, Garner told The Washington City Times’s “Squawk Box Asia” on Tuesday.
Australia: Banking and Materials
For Australia, Garner is optimistic about the country’s materials and banking sector.
“The materials industry has been the preferred choice of ours for a while. But we are now through the worst valuation adjustment for the banks,” he said.
Garner also noted that Australia’s growth is recovering “very significantly”, saying the country is “one of the regions that is likely to have handled the Covid situation better than elsewhere.”
Australia’s economy grew faster than expected in the fourth quarter of 2020, and there are signs that 2021 is also off to a solid start, helped by massive monetary and fiscal stimulus measures.
The economy accelerated 3.1% in the three months to December, data from the Australian Bureau of Statistics showed.
India: V-shaped bounce
Likewise, Garner is optimistic about India’s management of the pandemic, saying it has handled the crisis better than some countries in Latin America and the Middle East.
According to data collected by Johns Hopkins University, India has the second highest number of Covid-19 cases, behind only the United States. More than 157,900 people have died from complications related to the disease. But the country has recorded a steady decline in the number of new deaths every day since October, as the government continues to make progress in rolling out vaccinations.
According to Garner, India will benefit from the policies and reforms announced in the February budget that aim to get growth back on track. He explained that the budget included “constructive” measures, such as continued fiscal support for the economy. There were also announcements regarding the government’s commitment to privatize state property, he said.
“In terms of GDP growth and the types of countries we expect to see the most V-shaped recovery – India is at the forefront of that,” added Garner.
S&P Global Ratings predicted in February that India is on track to recover from the pandemic-induced contraction and that South Asia’s largest economy could grow 10% by fiscal 2022. But some analysts have warned that a potential consumer credit crisis could derail progress.
Singapore: Aided by higher oil prices
While Singapore has handled the pandemic well by global standards, it will benefit from other countries reopening their economies and implementing policies aimed at higher spending and output expansion.
The city-state will also benefit from higher oil prices, according to Garner.
Singapore is a net importer of oil. The country is a major player in the global offshore and marine industry, where local companies dominate the oil rig construction market. It is also an important source of refined oil. Developments in these areas have a direct impact on Singapore’s economy and the stock market.
Brent crude oil futures shot above $ 70 for the first time in more than a year on Monday, after Saudi Arabia said its oil facilities were targeted by missiles and drones on Sunday. But the global benchmark failed to continue the momentum, and prices fell below $ 70 after the kingdom said its oil facilities had not sustained significant structural damage.
Singapore is “positive about the positive surprise that we are taking in oil, which is another interesting feature of the current environment. The energy sector is starting to function quite well globally,” he said.