INSUBCONTINENT EXCLUSIVE:
By Moxy Ying and Harry SuhartonoThe 90-day cease-fire in the U.S.-China trade war added about $520 billion of market value back to Asia’s
Now, it looks like the party is over.
Here is where we are: Asian took a breather Tuesday, with MSCI Asia Pacific Index coming off from a
Japan’s Topix closed 2.4 percent lower, ending its seven-day rising streak as investors took profits and the yen strengthened
Chinese shares fluctuated between gains and losses, and Hong Kong’s Hang Seng Index fell slightly.
The theories swirling around the
short-lived rally in Asian stock markets include:
A lot could happen in 90 days and there hasn’t been much clarity past that
Pictet Wealth Management wrote in a Dec
3 report that “the devil will be in the negotiation details.” Some say investors are seeing a “sell the rally” strategy play out
There was also the fact that Trump left his advisers scrambling on Monday to explain a trade deal he claimed he’d struck with China to
This agreement doesn’t exist on paper and hasn’t been confirmed by Beijing, which has thrown some shade on the optimism
We had an analysis piece about Chinese firms that are worried the U.S
trade-war truce could be short-lived.
What’s NextThis brings us to: what happens now Without slanting the discussion one way or another,
there are several things to watch our for
First, market turbulence is here to stay
In a research report published Monday, Societe Generale strategist Frank Benzimra said the trade truce is a positive development for risky
assets, but future talks may not be smooth and that “opens the door for more volatility during the next three months.” That should be
good news for traders.
Aberdeen Standard Investments fund manager Bharat Joshi is more skeptical
He recommends riding the wave available from this run-up in stocks, but that this won’t last long
“The recent gain from the truce between U.S
and China is more like a knee-jerk reaction, and I don’t expect that to help the overall global fundamentals going forward,” he said
“I would prepare myself to cash in in six months or so.”
Credit Suisse published a note where it upgraded South Korean stocks to a buy
rating and Taiwan to a hold
In that report, the firm’s analysts also said emerging-market stocks will have a more favorable climate next year on a flat to marginally
dollar, while it double-downgraded Indian equities to sell and dropped Malaysia one notch to a hold rating.
For the optimists out there,
perhaps historical data can help: December hasn’t traditionally been a bad month
In the past 30 years, the MSCI Asia Pacific Index had positive December returns almost 70 percent of the time
While the first day of that month hasn’t anticipated the gauge’s monthly direction in the past two years, it did between 2011 and
2015.
One bright spot in Asia has been the Philippine market -- the country’s benchmark gauge kept its momentum, rising as much as 2.1
percent on Tuesday and going past a key level of 7,600
“There are no sellers right now, so stocks are rising sharply and rapidly,” said Manuel Cruz, a strategist at Papa Securities.
