Analysts' view: Stocks rout continues, growth prospects bleak

SINGAPORE (Reuters) - Political leaders failed to halt a global stock market rout that gathered steam as investors lost confidence that Europe and the United States can rein in their budgets quickly and fear spread of a double-dip recession.

Following are analysts' views on the reasons for the crisis and prospects for markets.

TAIZO ISHIDA, PORTFOLIO MANAGER AT MATTHEWS INTERNATIONAL CAPITAL MANAGEMENT LLC

"It is a knee-jerk reaction from the U.S. and Europe overnight and my thought is that this is simply overdone. I don't see any immediate 'catalyst' to pull out this market from the misery, but valuation is looking very attractive for equity investors. It appears that people are more concerned with future US growth, but I still see growth in East in the long run."

IWAN AZIS, HEAD OF THE ASIAN DEVELOPMENT BANK'S OFFICE OF REGIONAL ECONOMIC INTEGRATION

"Emerging Asian markets remain vulnerable to abrupt changes in global investor sentiment. The knock-on effects from events in the U.S. and Europe will go far beyond portfolio returns, as a weakening global economy will hurt our exports.

"While emerging Asia's markets have not been immune to these developments, the region's strong fundamentals and interest rate differentials with advanced economies are expected to reignite capital inflows to the region later this year.

"While freer capital mobility is welfare-enhancing in theory -- as it promotes better and more efficient allocation of financial resources -- large and volatile capital flows are risks and present challenges to emerging market economies."

ROBERT HOWE, CEO OF GEOMATRIX, HONG KONG-BASED FUND

"Scary times these two weeks. We are in Japan near the intra-day lows of the nuclear meltdown scare, and almost to the March-2009 lows. Of course we think it is overdone. After 2007-9, investors have either hard-coded into their on-line brokerage accounts or have soft rules of stop losses, and the whole world is following those.

"It will take determined intervention by various authorities to stop the process. I would imagine a lot of the shorts have been covering, so forced buying into a policy rally is less of something to be hoped for. What we like about Japan is intervention in the yen, which they are not sterilizing, so should increase the money supply at last, a mild QE3."

PETER HICKSON, MANAGING DIRECTOR, GLOBAL COMMODITY RESEARCH, UBS

"The market is asking whether policy makers have many more bullets to fire. China was the savior of the world in 2009 and people ask the question can they do it again. Or is this the recession we should have had in 2009 and it's now coming. It clearly looks like a global recession and people are pricing that in. I suspect some time during this week things should stabilize and people will come back to the market.

"People are a little bit more concerned this time because there has been a massive amount of money put into the system by China in 2009/10 and the question is whether they can sustain it and how effective it will be. Our view is that places like India and China in this environment are probably more stable than the developed world. I think there is comparative value in India, China and Indonesia."

WARREN HOGAN, CHIEF ECONOMIST, ANZ BANKING CORP, AUSTRALIA

"We are not seeing a replica of Lehman in terms of a systemic failure of the global banking system, most of the bank markets are still functioning reasonably, in terms of funding markets, commercial paper markets.

"But what we are looking at is a world economy that may dip back into recession led by the U.S. and of course a sovereign debt problem in Europe which could undermine Europe's banking system.

"We are looking at markets pricing for some sort of financial crisis. I think we are at a critical period now. The declines in the equity market globally are around 15 to 20 percent, that's still an order of magnitude regarded as a correction. If we see another 5-10 percent decline in equities we are in slump territory indicative of some sort of financial seizure."

ALEX HILL, CO-FOUNDER OF SINGAPORE-BASED HEDGE FUND TANTALLON CAPITAL THAT MANAGES MORE THAN $300 MILLION

"We have been cautious about the unfolding events in Europe for some time and are concerned about China slowing more than what is priced in to the market. The macroeconomic picture outside of Asia is bleak and Asia's ability to remain immune is doubtful in the extreme."

ANTHONY BOLTON, PORTFOLIO MANAGER, FIDELITY

"I believe the recent stock market volatility reflects a familiar pattern during this bull market of short, but often very sharp setbacks, within a bull trend. For some time I have argued the outlook for the U.S. and particularly Europe is for growth but well below normal growth rates. In my view this makes the case for exposure to developing markets and particularly those of Asia even more compelling where growth rates by comparison, even though they are slowing, will still be very attractive.

"History shows that normally extreme equity market volatility as we are now experiencing should be seen as a time of opportunity rather than a time to become more defensive."

LI-GANG LIU, HEAD OF CHINA ECONOMICS, ANZ

"At this moment, the most important policy the U.S. should have is a medium-term fiscal contraction plan, although in the short-term what they need is to have a stimulative fiscal policy to push the economy out of a very anemic recovery.

"But the administration and the Congress will have to have a very clear medium-term fiscal contraction plan so there is no doubt the U.S. fiscal conditions will return to a sustainable path.

"The European countries need to make a firm stand as to how they will deal with the contagion problem from Greece to other periphery countries. They need to have a stronger policy to calm the market. The response so far has been indecisive, sometimes timid."

(Reporting by Reuters bureau, compiled by World Desk Asia)