The following are excerpts from a report by analyst Ajay Kapur of Mirae Asset Securities in Hong Kong, which was published on March 3.

While US leading economic indicators have stabilized, and are now rising, the rest of the world is in free-fall. The mercantilist and the current account surplus markets – Germany, Japan, China and most of Asia – are seeing their business model collapse.

The asset-backed over-fed US, UK, Spanish, and Australian consumers face years of deleveraging and diet. Policymakers across the world, despite their blue suits and erudition, are well behind the curve.

After years of critiquing Japan for being lead-footed, they have turned Japanese themselves in being out of sync with markets. Near-term, some of the tactical indicators we track are looking oversold – i.e. the Tape, “less-smart” investor sentiment and advisory sentiment.

We cut back net exposure in early January, and we are now thinking of nibbling a bit – just waiting for more of our short term indicators to line up. We would not be selling at these levels.

Source: Mirae Asset Securites (HK), Mar 3