What investors are saying about Asia’s record equity rally

From left: The Hong Kong Exchanges flag, Chinese national flag and Hong Kong flag are hoisted outside the Hong Kong Stocks Exchange in Hong Kong June 7, 2016. — Reuters picFrom left: The Hong Kong Exchanges flag, national flag and Hong Kong flag are hoisted outside the Hong Kong Stocks Exchange in Hong Kong June 7, 2016. — Reuters picHONG KONG, Nov 22 — Asian stocks headed for a record close for the second time this month as the regional benchmark gauge surpassed its 2007 peak, led by finance and technology stocks after US continued their bounce from a two-week slide.

The MSCI Asia Index rose 0.6 per cent to 172.67 as of 9.52am in Hong Kong. The gauge passed its 2007 closing high on an intraday basis on Nov. 9 but didn’t hold the level. Japan’s Topix index climbed for a second day today, rising 0.5 per cent, after its worst week in seven months. The Nikkei 225 Stock Average gained 0.7 per cent.

The Asian equity gauge has outperformed its US and European peers this year, helped by surging Chinese stocks such as Evergrande Group and Sunac Holdings Ltd.

Tencent Holdings Ltd’s has more than doubled this year, beating Alibaba Group Holding Ltd to become the first Chinese technology stock to break the US$500 billion (RM2.07 trillion) market value barrier. The MXAP Index has advanced 28 per cent in 2017, versus a 16 per cent increase for the S&P 500 Index.

South Korea’s Lotte Corp led gains on the regional benchmark index Wednesday with an 8.7 per cent surge after Lotte Group chairman Shin Dong-bin sold a 3.57 per cent stake in Lotte Shopping via block trading yesterday. TDK Corp rose 5.2 per cent in Tokyo, while Mirae Asset Daewoo Co jumped as much as 6.7 per cent in Seoul.

Hong Kong’s benchmark Hang Seng Index gained as much as 1.3 per cent, rising above the 30,000 level for the first time in a decade as Tencent extended its rally and Chinese financial shares climbed.

Here’s what investors and strategists are saying:

Timothy Moe (analyst at Goldman Sachs Group Inc)

Earnings growth has been the main driver of the gains this year for MSCI Asia Pacific ex-Japan Index, according to a report published today. Corporate profits, which accounted for 19 percentage points of the index’s 30 per cent advance so far this year, will also push stocks higher in 2018.

“Macro growth should remain firm, driving a 14 per cent rise in profits.” The second half of 2018 could bring challenges as central banks around the world scale back stimulus.

Hao Hong (chief strategist at Bocom International Holdings Co)

Asia is still in a cycle of earnings improvement which will continue to support the benchmark index The MXAP gauge is heavily weighted toward information technology companies which are showing strong earnings Monitor growth momentum of technology giants that have been leading gains.

Michael McCarthy (market strategist at CMC Markets)

The new all-time highs in the US have led to a great start in Asia today and global sentiment continues to improve Investors have a fear of missing out, so that momentum may continue. The “fragile position” of global monetary policies may be a source for shocks in 2018.

Eddie Tam (chief executive office at Central Asset Investments)

“Technically I’m a little bit uncomfortable because some stocks jump too quickly. But from fundamental perspective I think the bull market is not yet over.”

He believes funds will continue to flow into the region’s emerging markets as China’s de-leveraging and rebalancing progress will continue to support investor confidence.

Nicholas Teo (trading strategist at KGI Securities)

Now is the time to take some profit off the table as valuations are stretched Expects to see more global funds holding underweight positions in Asian stocks. — Bloomberg

Source: The Malay Mail Online

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