BNP Paribas expects the Asia region to be the “sweet spot” in terms of strong returns from emerging markets that it is forecasting for 2013, with a “base case” expectation of returns between 12 and 13 per cent over the coming 12 months.

In an Asia strategy report on equities markets, the Paris-listed bank said it is overweight – bullish – on Hong Kong, mainland China and India, while it is overweight financials, property, industrials (including automakers), consumer discretionary firms and utilities. On the other hand, it is negative on materials and energy businesses.

The bank pointed out that Asian equities as a group chalked up returns of 20 per cent in 2012, which may come as a surprise to some commentators given that the past 12 months were often not seen as a particularly strong year for the region’s stock market, given concerns such as the risk of a “hard landing” in China.

For the Asia-Japan region as a whole, BNP Paribas forecasts gross domestic product growth in 2013 of 6.0 per cent year-on-year, and forecasts 6.9 per cent GDP growth in 2014. For Japan, growth is a barely anaemic 0.2 per cent in 2013 and then flat in the following year. As far as China is concerned, the forecast growth figures are 8.3 per cent and 7.8 per cent respectively. Those numbers compare with a world average GDP forecast for 2013 and 2014 of 3.4 per cent and 3.8 per cent, respectively.

Turning to inflation, while the world is expected to see consumer price inflation rises on average of 3.6 per cent and 3.5 per cent this year and the next, the Asia ex-Japan figures will be slightly higher, at 4.2 per cent and 3.9 per cent, the bank said.

Within Asia, the highest CPI rate will be from India, at 7.6 per cent this year, BNP Paribas said, while the lowest expected inflation rate will be in Thailand, at 0.5 per cent.