Politics will be helping to shape portfolio investment allocations within Asia over the next 12 months, as governments from India to Indonesia prepare to hold national elections.

"Everywhere in Asia, politics is becoming a bit more critical," said Nilesh Jasani, regional equity strategist at HSBC. "You have imminent elections in places like India, Indonesia, the Philippines and Taiwan. Political risk is somewhat rising.

"I mean it's not going to lead to people pulling out of Asia but, within Asia, it could certainly lead to a reallocation," Hong Kong-based Jasani told Reuters.

India is scheduled to hold national elections in 2004 and polls in key states later this year.

The Philippines, where the dust is just settling after a failed mutiny by renegade soldiers, is due to elect a new president in May next year.

Neighbouring Malaysia will see long-serving Prime Minister Mahathir Mohamad step down later this year, while Indonesia will hold parliamentary and presidential elections in 2004.

Singapore's Prime Minister Goh Chok Tong has said he will make way for his successor, deputy prime minister Lee Hsien Loong, once the economy recovers from a downturn.

Taiwan will elect a new president in early 2004.

Analysts say conservative investors could look for political safe havens such as Thailand, which is not facing elections or a change in leadership next year.

But braver souls may venture into markets where elections are likely to be held to reap possible benefits from pre-poll spending by incumbent governments.

"It's a case of again the non-tradeables sectors of Asia outperforming, because the governments want to be re-elected and are generous in terms of taxes and also seem to be generous in terms of monetary policies," said Markus Rosgen, chief Asian strategist at ING Financial Markets.

"Housing, financials and consumer stocks are likely to be the natural beneficiaries," Rosgen said.

ING said it expected Standard Chartered Plc STAN.L 2888.HK, Singapore's Capitaland CATL.ST, PT Telkom Indonesia TLKM.JK, Indonesian cigarette maker HM Sampoerna HMSP.JK, Malaysian car maker Proton Bhd PROT.KL and banking group Commerce Asset-Holding Bhd COMM.KIL to benefit from increased consumer spending ahead of elections or leadership changes.

Money managers said governments in Taiwan and India might inject additional liquidity into their economies, which in turn could boost local buying of stocks.

"In India and Taiwan, it (the politics would till the balance more towards the positive," said Kes Visuvalingam, director of Asian equities at First State Investments.

Last week, the Indian central bank cut its benchmark short term interest rates, a step that could make cheaper credit more available.

In Taiwan, a move by local regulators to abolish a qualified foreign institutional investor (QFII) scheme by end-2003 could boost the nation's weightings in global benchmark indices and spur an inflow of foreign funds.

Some money managers are quick to warn that any rise in anti-China noise ahead of Taiwan's presidential elections would hurt local markets and turn away foreign investors.