Aberdeen Asia warns of bear rally

By Nopporn Wong-Anan

SINGAPORE (Reuters) - Aberdeen Asset Management Asia said on Thursday recent gains in Asian equities were a "bear rally", and it had been actively switching stocks according to fluctuations in the markets.

The company -- which prides itself as a long-term investor that buys and holds quality stocks -- has been switching in and out of companies such as supermarket operator Dairy Farm (DAIR.SI) after sharp gains in the share price, Aberdeen Asset's Asia head, Hugh Young, said at a briefing in Singapore.

He recommended investors wait for markets to pull back, and "buy on the bad days when everyone gets negative".

"This is not a green shoot of recovery (but) an exceptional bear market rally ... Our view is still that the economies of the world, particularly those in the West, face very strong headwinds as there's still lots of problems out there," said Young, who oversees about 35.7 billion pounds of investments.

Young said Aberdeen took advantage of the recent rise in shares of Hong Kong Exchanges & Clearing (0388.HK) and made around 70 percent in two months. The firm has since switched back to firms that it regards as long-term strategic investments.

These long-term investments include Singapore's Oversea-Chinese Banking Corp (OCBC.SI), Dairy Farm and PT Unilever Indonesia Tbk ULVR.JK.

The firm also owns Indonesian banks Permata (BNLI.JK) and NISP (NISP.JK), which is majority owned by OCBC.

Asia ex-Japan stocks have gained 57 percent since early March, spurred by liquidity flows into the region amid signs the global economy may have bottomed.

Many investors also believed Asian governments and firms are financially in better shape than their counterparts in the West, a view that Young also shares.

The OECD said on Wednesday the economic outlook had improved for the first time in two years, although it also warned rising unemployment and ballooning deficits could knock a weak recovery off track.

The Federal Reserve said on Wednesday the recession in the United States was easing.

"The West did a pretty good job of painting over cracks by printing lots of money, stabilising the financial system. But it (the recovery) looks very precarious," Young said.

(Editing by Kevin Lim and Jon Loades-Carter)