Our eye on the chart: Has Asia's underperformance reached a bottom? 

Published on May, 27th 2021 Market and research
Flageollet

Stéphanie BIGOU

Portfolio Manager

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:

  1. The recovery of global growth and USD depreciation are not finished yet
  2. Improving or stable health situation in many countries (with the exception of India)
  3. Lower risk of an inflationary slippage due to lower food prices (pork) and China’s monetary policy
  4. US interest rates expected to increase moderately over the coming weeks
  5. Persistent shortage of semiconductors increases the pricing power of Asian companies
  6. The free trade agreement between the major Asia-Pacific nations (RCEP) provides a sustainable regular trade pool

chart

Source: Bloomberg, Seeyond – Data from January 2015 to May 2021 – Basis 100 - daily


This article has been provided for information purposes only to professional clients as defined in the MiFID Directive. It must not be used for retail investors. The provision of this material or reference to specific sectors or markets in his article does not constitute investment advice or a recommendation or an offer to buy or sell any security. Investors should consider the investment objectives, risks, and expenses of any investment carefully before investing. Views expressed in this article as of the date indicated are subject to change and there can be no assurance that developments will transpire as may be forecasted in this article.