Nomura Holdings Inc strategists on Tuesday joined their peers at Morgan Stanley in calling a bottom for battered Asian equities, including chipmakers.
The Japanese broker said the asset class could bottom “in the next few weeks” after reviewing indicators on the last 12 US recessions and five chip cycles.
Morgan Stanley strategists, including Jonathan Garner, made a similar call in an Oct. 4 note amid “abundant” signs of extreme selling.
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The risk-reward is “quite attractive on Asian stocks” for an investment horizon of more than a year, Nomura strategists, including Chetan Seth, wrote in a note.
A sustained recovery “may occur sometime in the first half of 2023” assuming there are no delays in China’s reopening and that a US recession does not go beyond this year, they said.
The US Federal Reserve’s resolve to curtail high inflation with large rate hikes has raised fears of a recession and put pressure on risk assets, but in Asia the pain is exacerbated by China’s problems.
Many of the region’s gauges feature among the world’s worst performing markets this year, often weighed by China’s COVID-19 policy and property crisis, and more recently, a rekindling of US-China tensions over tech supremacy.
In Taiwan, the TAIEX has dropped 28.77 percent this year so far, after the benchmark index yesterday fell below 13,000 points on the back of futures-led selling throughout the session.
Contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) again dropped below NT$400, contributing about 100 points to the TAIEX’s fall.
The TAIEX closed down 147.92 points, or 1.13 percent, at 12,976.76. Turnover on the main board totaled NT$184.076 billion (US$5.75 billion), with foreign institutional investors selling a net NT$12.13 billion of shares.
“Today was a futures-led sell-off where institutional investors simply cut their holdings in the spot market in a bid to profit in the futures market, where the October contracts expired on the same day,” Concord Capital Management Corp (康和投顧) analyst Lu Chin-wei said.
“As the most heavily weighted stock in the market, TSMC was affected by being sold off by those who held large short-position contracts in the futures market, and fell below NT$400 again today,” Lu said.
TSMC closed down 2.83 percent at NT$395.5.
Lu said that the TAIEX is likely to test the nearest technical support ahead of 12,809 points, the intraday low on Thursday last week.
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