Only 2 Asia-Pacific markets have been in positive territory so far this year

As the market closes on Wednesday, Singapore’s Straits Times index ranks regionally first, up 3.25% year-over-year.

Lorraine Ishaq | Bloomberg | Getty Images

There are only two major indicators across Asia-Pacific that are still in positive territory in 2022, and both are in Southeast Asia.

As the market closes on Wednesday, Singapore’s Straits Times index ranks regionally first, up 3.25% year-over-year.

In a note released Thursday, Morgan Stanley equities analysts Wilson Ng and Derek Chang said Singapore stocks were “a safe haven in the global market.”

“As monetary stimulus has stopped, central banks have tightened monetary policy, pushed up interest rates, and pushed up supply by events in Ukraine and China. Rising inflation has pushed global markets to moderate growth,” Ng and Chang said.

“Despite an uncertain global outlook, the macro situation in Singapore appears to be relatively strong. GDP growth continues to decline, but thanks to the resumption of progress this year, it is still above trend levels,” they say.

Indonesia’s Jakarta Composite ranks second regionally, with an annual profit of 3.22%.

Many factors justify the relative outperformance of the ASEAN market YTD.

Chetan Seth

Asia-Pacific Equity Strategist, Nomura

Both indicators outperformed peers across the region, which has seen losses so far this year. China’s markets have suffered the most.

Mainland China’s Shenzhen component ranks last among the region’s major markets, sinking more than 24% since the beginning of the year. The Shanghai Composite also saw heavy losses, sliding about 15% at the same time.

Concerns over supply chain disruptions from an uncertain regulatory perspective of industries such as technology, as the mainland has been battling its most severe covid wave since early 2020 for weeks.

Elsewhere in North Asia, South Korea’s Kospi and Taiwan’s Taix – home to many of the largest exporters benefiting from the previous epidemic – have both lost more than 10% so far this year.

“Many factors justify the relative outperformance of the ASEAN market YTD,” said Chetan Seth, Nomura’s Asia-Pacific equity strategist, referring to the Southeast Asian Association. He cited factors such as the region’s economic reopening and the Indonesian and Malaysian markets “benefiting positively from the high price of the product”.

“Amid growing geopolitical risks and growing concerns around the global recession, ASEAN equities generally do relatively well because they have less trade-offs with the rest of the world – especially compared to North Asia,” Chetan said.

Winnie Woo of Bank of America said that the outperformance of banks is another reason behind the strong performance of ASEAN.

“With rising interest rates and rising inflation, banks have spread across the region,” said Wu, chief China strategist and head of research at the firm’s larger China financial institution. “Markets in Singapore, Indonesia and Australia have relatively high index weights in the financial sector, and have performed well, whereas Japan, Korea and China have relatively low weights in the index.”

Stock picks and investment trends from CNBC Pro:

Related Posts

Leave a Reply

Your email address will not be published.