Only 2 Asia-Pacific markets are in positive territory so far this year
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At the close of Wednesday’s market, Singapore’s Straits Times index was in first position regionally. It has risen by 3.25% annually.
Lauryn Ishak | Bloomberg | Getty Images
Only two indexes in Asia-Pacific are currently in positive territory in 2022. Both are located in Southeast Asia.
Singapore’s closing market was Wednesday. Straits Times indexRegionally, is first with a rise of 3.25% over the past year.
Morgan Stanley equity analysts Wilson Ng, and Derek Chang stated that Singapore stocks offer a safe haven in the midst of turbulent global markets.
Ng and Chang stated that global markets face growth moderation due to fiscal stimulus, rising interest rates, as central banks tighten their monetary policies, and increased inflation caused by shocks such as those in Ukraine or China.
“Despite uncertain global outlooks, Singapore’s macro-conditions appear to be relatively strong.” They said that although GDP growth will slow down, it is expected to remain above trend levels due to the reopening of progress in this year’s fiscal year.
Indonesia’s Jakarta CompositeWith 3.22% annual gains, it is second in the region.
There are many factors that justify ASEAN’s relative underperformance YTD.
Chetan Seth
Nomura, Asia-Pacific equity strategist
The indexes outperformed their regional peers, who have suffered losses for the year. China’s market has been the most affected.
The Shenzhen ComponentChina mainland ranks last in terms of major regional markets. It has plunged by more than 24% from the beginning of the year. These are the Shanghai CompositeAlso, the company suffered severe losses. It lost 15% during that same time.
An assortment of factors contributed to Chinese stocks’ weakness, from uncertain regulatory outlooks in tech and worries about supply chain disruptions to fears that China would lose its technological industries. The mainland is currently battling the worst Covid wave since late 2020.
South Korea is another North Asian country. KospiThe Taiex in Taiwan — home to many major exporting firms that were beneficiaries during the earlier phase of the pandemic — have both dropped more than 10% each so far this year.
Chetan Seth (Asia-Pacific equity strategist, Nomura) stated that “Many factors justify the relative outperformance of ASEAN market YTD,” referring to the Association of Southeast Asian Nations. He pointed out factors such as economic opening in the region and higher commodity prices due to markets in Indonesian and Malaysia.
“Amid rising concerns around geo-political risks and slowdown in global growth, ASEAN equities generally do relatively better as they have lower trade-linkages to the rest of the world – especially compared to North Asia,” Chetan said.
Winnie Wu, Bank of America CEO, said that ASEAN’s strong performance was also due to the bank outperformance.
Wu is the chief China strategist at the firm and heads the greater China financial institution research. “The markets in Singapore, Indonesia, Australia have high financial index weightings. They outperform, while financials weigh less in Japan, Korea, China, and China.
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