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As Uncertainty Prevails, Look Towards China

Asian stock markets have fallen some 50 percent since the start of the year and many investors may be tempted to think the indices are close to bottoming out.

However Patrick Shum, chief strategist at Karl-Thomson Securities is taking a cautious stance, telling CNBC that the outlook for Asian markets is still uncertain.

"Most of the negative news have been priced in, so if there is no further bad news, the markets are very close to a bottom, but volatility will remain very high," he says.

(Watch full interview at left)

Shum in particular favors the China and Hong Kong markets. He thinks the Chinese government will continue to implement measures to stimulate the domestic economy.

"The People's Bank of China will cut interest rates next year... (and) it will support the stock market and also the economy... The A-share stock market will move between a level range, let's say 1,600 points and 2,000 points."

China announced its largest interest rate cut in more than a decade on Wednesday, reducing its benchmark lending rate and deposit rates by 108 basis points.

Many investors have also been flocking to government bonds as a safe-haven investment but Shum says this is not a wise strategy.

"I will worry about money supply (in the long term), because the U.S. and European governments...have pumped a lot of money to save their economies," he says.

"In the longer term, you will see the inflationary pressure increase, that means central banks will increase interest rates...that means the outlook for the bond market may be bearish," he adds.

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Catch "Protect Your Wealth" on CNBC's Asia Pacific network every Tuesday on "CNBC's Cash Flow," Wednesday on "Asia Squawk Box" and Thursday on "Capital Connection."