From trading desks to Wall Street analysts, positive calls are growing over Asian stocks this year as the outlook for earnings, valuations and flows all point upward.
The rally since end-October has pushed the MSCI Asia-Pacific Index up by almost 23 percent, outperforming the US benchmark by the most since 1993 while also beating its European peer. The predominant driver has been China’s reopening, with a weakening US dollar giving an added fillip as investors look for recession-proof markets.
Heading for the best start to a year since 2012, the MSCI Asia gauge has climbed 7.2 percent this month. The rally has many more months to run, according to a survey of fund managers by Bank of America Corp. China’s growth outlook is getting rapidly upgraded in a boon for the region’s economies, while earnings estimates are also rising in contrast to downgrades seen in Europe and the US.
Photo: AP
With recession worries in the developed world, “the prospect of the Chinese authorities supporting their domestic growth has made both Chinese and broad Asian assets more attractive to global investors,” said Gary Dugan, chief executive officer of the Global CIO Office, an asset manager and financial advisory firm. “We have increased our weightings in Asia and see this could have many months of payoff.”
China has received most of the spotlight in Asia’s rally, with the MSCI China Index surging more than 50 percent since the end of October, but optimism is also spilling over. Benchmarks in the Philippines and Vietnam have entered bull markets this month while Taiwan is nearing the milestone.
Bank of America’s Asia Fund Manager Survey found 95 percent of investors expect stocks in Asia-Pacific excluding Japan to rise in the next 12 months, and about half of them anticipate double-digit gains. Most of the fund managers are “unabashedly bullish on China,” it added.
Flows are reflecting the seismic view change. Foreigners have purchased US$16.5 billion worth of Chinese stocks this month alone, set to be the largest monthly inflow on record.
They have also poured US$4.5 billion into Taiwan and US$3.3 billion into South Korea.
Even with the rally, Asia’s valuations do not look stretched. The region’s MSCI benchmark is trading at 12.9 times forward earnings estimates, in line with its five-year median.
To be sure, an economic slump in the developed world may sap some of the newfound optimism toward Asia, especially for export-dependent markets such as South Korea. And as China’s economy gets back into full swing, there is a risk of inflationary pressures getting stoked, which could keep central banks hawkish for longer.
Meanwhile, earnings paint a promising picture. Twelve-month forward profit estimates for the MSCI Asia benchmark have risen about 6 percent since the end of October, compared with a drop of at least 1 percent each for gauges representing the US and Europe, according to Bloomberg data.
“There isn’t any economy within Asia which has a recession risk,” Sanford C. Bernstein Ltd strategists led by Sarah McCarthy wrote earlier this month. “On a 12-month forward basis we expect Asian equities to end 2023 on a positive note.”
Vaccine skeptics blocking transfusions for life-saving surgeries, Facebook groups inciting violence against doctors and a global search for unvaccinated donors — COVID-19 misinformation has bred a so-called “pure blood” movement. The movement spins anti-vaccine narratives focused on unfounded claims that receiving blood from people inoculated against COVID-19 “contaminates” the body. Some have advocated for blood banks that draw from “pure” unvaccinated people, while medics in North America say they have fielded requests from people demanding transfusions from donors who have not received a vaccine. In closed social media groups, vaccine skeptics — who brand themselves as “pure bloods” — promote violence against doctors
‘IT HURTS TOO MUCH’: After talks between Blizzard and NetEase over their contract broke down, servers hosting Blizzard’s games in China were shut down Millions of Chinese gamers have lost access to World of Warcraft after a furious dispute between US title owner Activision Blizzard Inc and NetEase Inc (網易), its longtime local partner in the world’s biggest gaming market. Devotees of the popular game took to social media networks to bemoan the loss, with one posting an image of a failed connection message accompanied by crying emojis. “It really hurts my heart,” one wrote. “It hurts, it hurts too much,” another said. Massively popular worldwide, particularly in the 2000s, World of Warcraft — often abbreviated as WoW — is an online multiplayer role-playing game set in
The US Department of Justice (DOJ) on Tuesday accused Alphabet Inc’s Google of abusing its dominance in digital advertising, threatening to dismantle a key business at the heart of one of Silicon Valley’s most successful Internet firms. The US government said Google should be forced to sell its ad manager suite, tackling a business that generated about 12 percent of Google’s revenues in 2021, but also plays a vital role in the search engine and cloud company’s overall sales. “Google has used anticompetitive, exclusionary, and unlawful means to eliminate or severely diminish any threat to its dominance over digital advertising technologies,” the
Auto supplier ZF Friedrichshafen AG and Wolfspeed Inc plan to build a US$3 billion wafer factory in Germany’s Saarland to make chips for electric vehicles and other applications, a boon for a region dependent on combustion-engine components, according to people familiar with the matter The go-ahead for the project is subject to commitments on subsidies amounting to a quarter of the total investment, the people said, declining to be named discussing private information. ZF would hold a minority share in the factory with its US chipmaking partner, located in Ensdorf near Saarbrucken. ZF operates its largest factory nearby, where 9,000 employees
RSS