Stocks in Asia are beating global peers by the most since 1993

Stocks in Asia are beating global peers by the most since 1993
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SINGAPORE (Nov 30): November is turning out to be the best month for Asian stocks since 1993 relative to their global peers.

The MSCI Asia Pacific Index jumped 15% this month, set for its biggest jump since 1998, as benchmarks in markets from Hong Kong to the Philippines saw strong gains that cracked records held for at least a decade. The MSCI All Country World Index is up less than 6%.

Asia’s surge has been driven by growing signs that China is easing its Covid-Zero policy, and expectations that the Federal Reserve will move toward a slower pace of rate hikes. Some asset managers are arguing this is only the start, making the case for the outperformance to continue into 2023, after the region lagged global peers for months.

“Relative to other EMs, we have much stronger balance sheets at sovereign and corporate levels, more prudent policy making, and positive structural reforms in a few key countries,” Peter Monson, portfolio manager at Nikko Asset Management, said in an interview. 

Foreign funds bought US$12.6 billion worth of shares on a net basis in emerging Asia excluding China this month, the biggest inflows in two years, according to data compiled by Bloomberg

Taiwan accounted for nearly half of the flows, as foreign investors including Warren Buffett bet on chipmakers amid easing tensions between China and the US. 

Traders also piled back into Chinese assets, spurred first by rumors spread early this month over a Covid-Zero exit plan, and then as the authorities introduced measures underlining an intent to relax restrictions. A slew of policy aid for the troubled property sector also helped.

Top Gainers

Index November Gain Set for Best Month Since
MSCI Asia Pacific Index 15% 1998
MSCI EM Asia Index 18% 2001
Hang Seng China Enterprises Index 29% 2003
Hang Seng Index 27% 1998
Taiwan’s TWSE Index 15% 2009
Philippine Stock Exchange Index 10% 2010

There was a “dramatic change in market sentiment, with policymakers in China unleashing different sets of policy support,” said David Townsend, managing director of EMEA Business at Value Partners Group. 

Goldman Sachs Group Inc said earlier this month that it expects a further stock rally in China and South Korea and predicted them to outperform in 2023.