Several key themes dominate the investment landscape in Asia.
One is the divergence in these economies; another is the question of which markets are most susceptible to the looming tapering of the United States' stimulus programme; and a third is just which regional countries are the big beneficiaries of a growth uptick in major global economies.
Seeing the region through this prism makes it easy to zero in on the bright spots.
The verdict is North Asia, according to Ms Fan Cheuk Wan, Credit Suisse Private Banking and Wealth Management's chief investment officer of Asia Pacific.
Amid the mixed macro picture in the region and fundamental red flags in Indonesia and India, Ms Fan picks North Asia because of the stronger fiscal and current account conditions of countries in that region.
These strengths make the region less vulnerable to concerns over the US Federal Reserve's tapering of its bond-buying programme.
They also stand to benefit from the recovery in the US, euro zone and Japan.
Q: How should investors position themselves in Asian equities on the back of expectations of a dialling back of the Fed's stimulus plan?
The current market consensus date of March 2014 for Fed tapering reflects complacency.
We believe the risk is that Fed tapering may come earlier than the consensus date and maintain our underweight position on the South-east Asian and Indian markets.
The rally in the South-east Asian markets is likely to be short-lived as lingering policy uncertainties over tapering will keep market volatility high.
We stay underweight on assets in India and Indonesia due to their weakened macroeconomic fundamentals. Q: Any sweet spots?
North Asian equity markets will be the bright spots in the next six months, given their exposure to higher growth in developed economies.
We are positive on Taiwan, Hong Kong and China and see opportunities in the technology and consumer discretionary sectors which will benefit from demand recovery in the US, euro zone and Japan.
On the currency front, the renminbi (yuan) remains a sweet spot in Asia, supported by China's foreign exchange reserves, current account surplus, growth stabilisation and positive progress in structural reforms.
We expect the renminbi to further strengthen towards six yuan against the US dollar in the next 12 months.
Q: What is the outlook for Asia across the various asset classes?
External vulnerabilities and structural issues have been key negative drivers affecting the performance of Asian equities, currencies and credits.
We are neutral on Asian bonds and focus on quality credits and high-yield bonds with shorter maturity.
We are tactically underweight on Asian equities but look for a market setback to rebuild equity position.
We are cautious on Asian currencies, especially those in countries with high external vulnerability and current account deficits such as India and Indonesia.
Q: There are mixed signals on the strength of China's economy. What's your take?
We overweight China equities, given growth stabilisation, improving earnings and progress in structural reforms.
Chinese banks stand to benefit from the upcoming fiscal reform which will address the local government debt problems.
Progress in structural reforms will reduce financial system risk and improve the long-term growth outlook for China, which will in turn be positive for Asia, given increasing intra-regional trade and business activities with China.
Q: Asian equities have underperformed developed markets this year. Has that made valuations in Asia more appealing?
Asian equities have stayed largely flat since the beginning of this year, significantly underperforming the developed markets.
Valuation of Asian equities, at 11.2 times 12-month forward price-earnings ratio, looks attractive compared to the historical range and global peers.
That has attracted rotation flows back to the region since mid-September.
Q: Europe appears to be making a mild recovery. But aren't there still inherent risks which could impact Asian markets?
Industrial production in the euro zone has been stronger than expected recently, with particular strength in Portugal and Spain.
Survey indicators remain consistent with ongoing economic expansion.
There are also tentative signs of bottoming in consumer and investment spending and labour markets.
As fears of a debt default or euro break-up continue to subside, financing conditions are easing in the vulnerable economies.
However, with credit still weak, inflation falling and the euro strengthening, the European Central Bank may well resort to additional easing measures.
Given that the euro zone contributes about 25 per cent of the world economy, its recovery is a major positive for global growth and supportive for Asia's export outlook.
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