Bourses across Asia have been tempered over the past few months, first by expectations that the Fed will begin cutting back on asset purchases, which it has since postponed, and more recently over the budget stalemate in Washington.
The spending and budget impasse has shut down the U.S. government for eight days so far and threatens to prevent the raising of the country's $16.7 trillion (10.456 trillion pounds) borrowing limit by an October 17 deadline, which risks a historic U.S. debt default.
Investors are getting increasingly anxious as the deadline approaches, pushing borrowing costs in the U.S. to a 5-year peak.
The sell-off has pushed valuations in China, Hong Kong and South Korea below their 5- and 10-year averages, measured by their 12-month forward price-to-earnings ratios, according to Thomson Reuters data.
But equity analysts polled by Reuters between Oct 1-8 said gains in those markets from now until the end of the year would range anywhere between 1.5 percent in Taipei to almost 6 percent in Shanghai.
"The global economic recovery is the broad theme for the prediction for higher index figures," said Oh Tae-dong, analyst at LIG Investment & Securities.
Although those predictions show modest gains from current levels, they are muted compared to a similar survey in June.
Notwithstanding the risk of tapering of the Fed's massive stimulus, equity strategists, usually a bullish lot, predict the region's main indexes would advance over the first half of next year, with double-digit gains from current levels in Seoul and Shanghai.
The Shanghai SSE composite index <.SSEC> which has lost over 3 percent so far this year, is expected to end the year at 2,325 points, representing a rise of around 5.8 percent from Tuesday's close of 2,198 but a full-year gain of just 2.5 percent.
"(In) the fourth quarter, especially October to November, China's economy will rebound, and the earnings of listed companies will be good, so the index has potential to rebound," said Cao Xuefeng, head of research at Huaxi Securities.
Growth in the Chinese economy, the world's second largest, has slowed this year, and fears persist even as signs of a recovery in the United States have failed to boost demand for Chinese goods.
Unlike in the past, Beijing is reluctant to implement strong stimulus policies for fear they could cause longer-term problems.
But, Premier Li Keqiang's government is expected to push more supportive, pro-growth initiatives, similar to the creation of the free trade zone in Shanghai last week, key to putting it on a more sustainable growth path.
That is expected to boost economic growth and coupled with attractive valuations could bring the shine back to stocks in mainland China and Hong Kong.
The Hang Seng Index <.HSI> is predicted to reach 24,000 by end-2013, according to the poll. That would translate into a rise of almost 3.5 percent from current levels and a full-year gain of close to 6 percent.
The index was seen hitting 24,650 by mid-2014.
SOUTH KOREA, TAIWAN STOCKS TO SURGE
Resurgent Chinese growth will also help South Korea's key share index notch up gains of 5.2 percent this year, ending 2013 at 2,100 points compared with Tuesday's close of 2,003 points. The index is almost flat so far this year.
The benchmark Korea Composite Stock Price Index (KOSPI) <.KS11> has been driven by foreign investors, who were net buyers of 1.7 trillion won worth of shares so far this year, after buying a total of 17.5 trillion won during 2012.
For mid-2014 and end-2014, the Reuters survey tipped the KOSPI at 2,225 points, as it factors in the effects of funds leaving its shores when the Fed begins to scale back asset purchases.
"By 2014, the South Korean market is expected to position at an upward end of the economic cycle and have adjusted to the Fed's normalised monetary policy," said Kang Hyun-gee, an analyst at IM Investment & Securities.
Meanwhile Taiwan's TAIEX <.TWII> is expected to rise modestly, ending 2013 at 8,500 points, up 10.4 percent for the year. It closed on Tuesday at 8,376.
Shares in Taiwan have gained more than 8 percent so this year, largely due to a more resilient electronics and diversified semi-conductor market that relies on demand from global technology giants such as Apple Inc (>> Apple Inc.).
(Polling by Samuel Shen and Chen Yixin in SHANGHAI, Lavinia Mo and Clement Tan in HONG KONG, Faith Hung in Taipei, Jungmin Jang in Seoul and Swati Chaturvedi in Bangalore; Editing by Kim Coghill)
By Yati Himatsingka