Goldman Sachs (NYSE: GS) Predicts 36% Growth in Asian Markets during 2010

Goldman Sachs (NYSE: GS) said that Asian stocks may offer returns as high as 36% in terms of the US dollar next year, being helped by emerging markets and earnings growth.

Goldman Sachs regional analyst, Timothy Moe, released a report yesterday saying that the MSCI Asia-Pacific excluding-Japan Index may rise  to 540 by next December and the MSCI Asia excluding-Japan Index may rise to 650.

The brokerage is more bullish than two other firms (BNP Paribas and Citigroup) which predicts gains between 9% and 20% for Asian stocks next yaer, according to two reports released today. The brokerage has taken a much more positive tone than a month ago when it had predicted “sluggish” performance for regional markets in 2010 citing slowing economic indicates after a rally from their Marhc lows.

In his report, Moe said,  “We started the fourth quarter concerned about a potential decline in global macro momentum and the impact of low capacity utilization in developed economies on Asian corporate margins,” He continued, “But having dug deeper into earnings and liquidity, we now feel this factor will affect the intra-year path more than the overall direction for the year.”

Goldman Sachs predicts that GDP growth in Asia (excluding Japan) will increase by 8.7% next year, lead by China’s expansion. That’s much more than the 4.2% growth rate Goldman Sachs predicts for the global economy.

Earnings for companies on the MSCI Asia-Pacific excluding Japan Index could grow by 34% in 2010, more than the 23% increase that other analysts predicted, according to the new report. Previously, the brokerage had predicted a 22% increase in profits.

Moe and his colleague stated, “Our analysis makes us surprisingly positive on Asian markets for 2010,” He continued, “The growth in emerging-market Asia should attract inflows from low-growth developed markets, providing an uplift to valuations.”