Bloomberg — Three equity markets in Asia are vying to become the world’s biggest gainers this year, even as a stronger dollar hurt the region’s attractiveness.
Stock indexes in Indonesia, India and Singapore are closing in on Brazil’s Ibovespa index, which rose 5.2 per cent in local currency terms, according to data from leading equity benchmarks compiled by Bloomberg. Asian benchmarks rose at least 3.5 per cent each, meaning a single-day gain could make up the difference. The rankings are mostly similar in dollar terms, though the gains differ.
South and Southeast Asian equities were among the few bright spots this year for global funds, as pandemic reopenings and a revival in tourism boosted corporate earnings. Inflation has also remained relatively benign in parts of the region and improving current account balances have helped reduce the impact of a stronger dollar.
Indian stocks attracted almost $6 billion from international investors this quarter, according to data compiled by Bloomberg. And while Indonesia recorded outflows this month, net inflows still amounted to more than $4.4 billion so far in 2022.
Still, South and Southeast Asia may become less attractive from 2023, as investors shift their focus to cheaper North Asian markets.
“North Asia is expected to outperform on valuation, an improving currency and interest rate environment,” said Frank Benzimra, head of Asia equity strategy at Société Générale SA. Investors are also positioning for a rebound in semiconductor industry earnings for the second or third quarter of next year, he added.
--Contributed Abhishek Vishnoi
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