‘S-E Asian stocks to outperform peers’
SINGAPORE: After lagging behind the wider region since 2013’s taper tantrum, Southeast Asian stocks are poised to start outperforming their peers.
That’s the view from Morgan Stanley and Nomura Holdings Inc in research notes released on Thursday and yesterday, respectively.
A completion of cyclical gains in earnings of technology and commodity companies, only modest US dollar strength versus Asian currencies and a small deterioration in sentiment in China would benefit Asean markets over the next few months, said Japan’s biggest brokerage.
“Structurally, Asean’s economies appeared better placed to deliver on growth than those in North Asia,” said Mixo Das, an equity strategist at Nomura.
The MSCI Asean index has rallied 9.7 per cent this year, trailing a 12 per cent rise in the MSCI AC Asia Pacific Excluding Japan Index.
The Asean gauge fell 22 per cent over the four years through the end of last year, compared with an 8.5 per cent decline in the wider Asian measure.
Philippines had the “cheapest” stock market in the region and was expected to outperform this year as earnings outlook improved and clarity on tax reforms could help boost consumption among the middle class, said Das.
Indonesia was rated “overweight”, while Malaysia and Singapore are seen to “underperform”. Das has a “hold” rating on Thailand.
Meanwhile, Morgan Stanley sees the United States Federal Reserve’s stance on US rate increases as supportive of emerging market currencies with Indonesia as the key beneficiary, said equity strategists Sean Gardiner and Aarti Shah.
Malaysia was the next preferred market, followed by Thailand, Singapore and the Philippines. Bloomberg