Asian Markets differentiating themselves

It’s the same theme this week, markets are responding to earnings with disappointment which resulted in a frustrating US stock market.

Although, looking beyond the US, Asia has held up quite well. As we have seen, over the past few days during Asian trading hours, most indices have not been sold-off and some have decent upward movements. This is partially due to an oversold market rebounding from the lows and others by better corporate earnings.

The pickup in interest has been reflected in the Asian ishares, where emerging Asian markets such as the Philippines, China and Indonesia are favoured with the biggest gains, averaging 2.5%. While North Asia such as Japan, Taiwan and South Korea had modest gains, averaging 0.5%.

Last year, the EMEA market was shunned by investors with the US assets allocation. The pickup in global growth would translate as improvement in the Southeast Asian economies on the demand of the region’s exports. There are domestic challenges in each of these countries which mean there is distortion where investors remain selective.

An example is the Jakarta composite, there’s been an influx of foreign-fund flows and interest since they ran a surprise trade surplus. The November trade surplus of $777m at the start of the year with CPI under control, manufacturing flash PMI showed expansion and stronger consumer confidence index all points to an improving picture.

The turnaround was not unnoticed, so far this month, Indonesia has seen net inflows in both its equity $266m and bond $2b markets. The rupiah has staged a comeback as the best-performing currency, against the dollar, by 0.76% year-to-date.

The Philippines composite has been trending upwards on a consistent basis since hitting a low in December last year, and has appeared to have momentum.

Macroeconomic data where industrial production and manufacturing have measured a steady pace, has research houses projecting a positive outlook for the country. The peso is the second worst-performing currency amongst the Asian counterparts with a -1.7%, against the US dollar.

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