Our eye on the chart: Has Asia's underperformance reached a bottom?
For Professional Clients in accordance with MIFID
Written on 25th May 2021 by Seeyond
Let’s look at the facts:
- Asian emerging stocks strongly underperformed the S&P500 since January 2021. The underperformance ratio is now close to the lows of 2015/2016, 2018 and Q1 2020.
What do we think?:
We think this underperformance could reverse or at least stop. Asian emerging markets have 6 supportive factors:
- The recovery of global growth and USD depreciation are not finished yet
- Improving or stable health situation in many countries (with the exception of India)
- Lower risk of an inflationary slippage due to lower food prices (pork) and China’s monetary policy
- US interest rates expected to increase moderately over the coming weeks
- Persistent shortage of semiconductors increases the pricing power of Asian companies
- The free trade agreement between the major Asia-Pacific nations (RCEP) provides a sustainable regular trade pool
Source: Bloomberg, Seeyond – Data from January 2015 to May 2021 – Basis 100 - daily
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