Macquarie, Westpac Among Asia Stocks Set to Gain, Merrill Says

By Chen Shiyin

July 23 (Bloomberg) -- Macquarie Group Ltd., Westpac Banking Corp. and Bendigo & Adelaide Bank Ltd. are among stocks most likely to benefit from a recovery in Asian markets, Merrill Lynch & Co. said.

The companies are among nine Australian equities on the list of 17 recommended in Asia, Merrill's Hong Kong-based strategists Mark Matthews and Daniel Casali said in a report today. The shares were picked partly because they are valued at discounts to their five-year averages.

``If one did expect markets to rebound over the course of the next few weeks, one might want to own a basket of stocks that are very oversold,'' the strategists said in the report. ``Australia could benefit more than other markets in a mean- reversion environment.''

The MSCI Asia-Pacific Index has dropped 15 percent this year as oil prices rose to records and the world's largest banks and securities firms reported writedowns and credit losses of more than $467 billion. The measure rose for a third day, by 1.4 percent, after plunging to the lowest since October 2006.

Outflows of as much as $13 billion from Asian emerging- market funds, volatility near a 10-year high, cheaper valuations, and the outlook for oil prices and the dollar are among signs suggesting that markets are due to rebound, the strategists said.

Macquarie Jumps

Macquarie Group, the nation's largest securities firm, rallied 11 percent today after saying it had a ``solid'' first quarter and has avoided the troubled assets that have caused losses among global banks. The shares remain 32 percent lower this year.

Westpac, Australia's fourth-biggest bank, jumped 6.3 percent, while Bendigo & Adelaide rose 2.7 percent. Merrill also recommended Coca-Cola Amatil Ltd., Fairfax Media Ltd., Goodman Group, CSL Ltd., National Australia Bank Ltd. and Macquarie Infrastructure Group in Australia.

The brokerage still has an ``underweight'' recommendation for Australia, Matthews and Casali wrote in the report.

In Hong Kong, investors should buy shares of Esprit Holdings Ltd., Guangzhou R&F Properties Co. and Dongfeng Motor Group Co., the Merrill strategists said. The other picks are Venture Corp. and City Developments Ltd. in Singapore, Tata Consultancy Services Ltd. and Wipro Ltd. in India, and Taiwan's Asustek Computer Inc.

To contact the reporter on this story: Chen Shiyin in Singapore at schen37@bloomberg.net