The growth in Asia is still intact, in spite of excess liquidity in China and inflation risks in India, according to analysts.
Analysts also said that Asian stocks are still fairly valued for now, and they do not see a main threat from growing capital inflows on key equity investors.
Asian markets have recently been jittery, as concerns over mortgage lending in China and double digit inflation in India shake the confidence of investors.
However, experts said it is a good strategy for key investors to overweight their Asian portfolios. Potential asset bubbles in China are short-term concerns and are not likely to derail the growth in the region, they said.
"Assuming there is a property slow down. Only 14.8 per cent of its GDP will be exposed to that. Is that cause for alarm? We certainly don’t think so,” said Kelvin Tay, chief investment strategist at UBS AG in Singapore.
"Because if the banks are not hit by a huge amount of non-performing loans, then they can carry on lending to general businesses. And if they can carry on lending then it’s not a macro issue, it’s a micro issue."
While inflation in India has recently hit double digits, it should be kept in check by central bank moves to stabilise food prices and tighten monetary policy, added UBS.
In spite of the growing capital inflows into the region, which threatens to overvalue equity portfolios, analysts said valuations still seem to be reasonable.
"If you compare it with the historical average at the high back in October 2007, these numbers have come down dramatically. This is the reason why we think that even though the capital flows are still coming into Asia, we do not think that the Asian region is overvalued at the moment," said Wong Weiyi, research manager at Fundsupermart.