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Asia Stocks Still Threatened by Earnings Downgrades

Share prices will remain volatile until after corporate earnings forecasts are inevitably downgraded, says a Schroders fund manager

Despite the recent gains in Asian stockmarkets—triggered largely by continued monetary policy easing in the US—share prices will continue to remain extremely volatile until after corporate earnings projections are finally downgraded to factor in macroeconomic conditions, says Louisa Lo, head of equity for Asia ex-Japan at Schroders Investment Management in Hong Kong.

"Going forward, the key thing is to focus on the stock level," Lo says. "When the liquidity flows come in and out, a lot of the stocks will be hit anyway. So it's best to go for the blue-chips, the stocks that you know are fundamentally sound."