Asian stocks may surpass their 2007 record highs in the next 2 1/2 years as the global economy emerges from a recession, AMP Capital Investors said.

China, India and Indonesia are among markets that are best positioned to recoup all losses by late-2011 even as shares in the US and other developed markets post “subdued returns” for the next five to 10 years, said Shane Oliver, Sydney-based head of investment strategy at AMP Capital, which manages about US$88.5 billion ($129 billion).

The MSCI Asia-Pacific Index has rallied 11 % this year, rebounding from 2008’s record slump. The measure is still 42% lower than its Nov. 1, 2007 high. Asia accounts for six of the world’s 10 best performers this year, led by benchmark indexes in Sri Lanka, China and India.

“We’re still in the early days of a cyclical recovery,” Oliver told reporters in Singapore. “The opportunities for the strongest returns are in Asia and the emerging markets.”

Still, Oliver cautioned that stock markets will undergo a “correction” over the next few weeks amid increased volatility and as earnings estimates and economic growth catch up with share-price gains. AMP will use the decline as an opportunity to increase its weighting in equities, he added.

Signs of a recovery in economic growth are “particularly bright” in China, where a 4 trillion yuan ($854 billion) stimulus plan has bolstered lending, investment and manufacturing in the world’s third-largest economy, Oliver said.

Gross domestic product may expand almost 8% this quarter after reaching a bottom in the fourth quarter, National Bureau of Statistics Economist Guo Tongxin estimated in a report posted on the agency’s website today.

“There’s still plenty of value in Chinese shares,” he said. “As China moves into more positive profit growth in 2010 and 2011, that will underpin Chinese equity markets.”