Asia Pacific economies are expected to stay on top of the equities game in 2010, with China and China-related themes likely to fuel growth, Fidelity International said in a statement yesterday.

“The structural story in Asia remains intact and the region is in a fortunate position whereby government, corporate and personal balance sheets are healthy which is very different story to many Western economies,” said FI investment director for Asia Pacific Maria Abbonizio. She added, however, that while Asian markets are highly attractive, much of the region's confidence will still anchor on the speed of recovery in the West.

Ms Abbonizio summarised the key drivers of Asian growth into four elements: emerging industries, natural resources wealth, the growing consumer class, and the low cost of manufacturing. Australia and Indonesia have already begun forging joint ventures with international firms for natural resources projects, while China is proving to be a formidable newcomer to the airline manufacturing industry.

A recent report by the Asian Development Bank has forecast China's economic growth to be at 8.2 per cent this year, from the earlier estimate of 7 per cent, with a further prediction of an 8.9 per cent growth rate in 2010. Fidelity believes that majority of the activity on Asian soil will be fuelled by China-related investments.

“In 2010, I believe that Asian equity markets should continue to do well. Economic fundamentals remain strong, there continues to be a healthy population growth and the trend towards urbanisation and industrialisation will require infrastructure development in urban and rural areas,” said Allan Liu, Fidelity's portfolio manager for the South East Asia fund, in the same statement.
 
“The key opportunities to watch out for are in sectors benefiting from the healthy growth in domestic demand and a global economic recovery," he added.

Fidelity managers generally expect 2010 to be a moderately bumpy ride for Asian financials, but changes in the region's consumption activity, particularly with the aggressive entry of foreign investment, will likely lead to added confidence.

The global financial crisis has caused a sharp drop in majority of markets, but Asia has proven itself to be largely immune and very quick to recover. With domestic demand growing at a healthy rate and exports continuing to improve, coupled with a strong influx of investment, a multiple-year recovery is only expected.