Australia
China
India
Indonesia
Japan
Malaysia
Philippines
Singapore
South Korea
Taiwan
Thailand
Vietnam
Germany
Hong Kong
USA
Switzerland
Singapore
United Kingdom
Asia-Pacific stock indices are leading the global equity markets during the first half of this year, despite the Covid-19 pandemic. As per CNBC estimates, Asian countries that topped the list included Vietnam, Taiwan, South Korea, India, Australia.
The market gauges out of Asia Pacific equities were higher in the first half, as Asian economies geared toward rescue efforts initially and ultimately for economic recovery from the coronavirus pandemic. Several countries in Asia rolled out direct stimulus payments to address the economic impact of Covid-19 and boost consumer spending. Better than expected export outlooks for their economies amid vaccine rollouts have also helped in driving these better-performing markets of Asia. Combined with unchanged benchmark rates by most central banks from Asia it has further benefited the markets.
Top Asia-Pacific stock indices of H1/21
Topping the list out of major Asia-Pacific stock indices was the VN-Index of Vietnam, that was the best-performing market for H1/21, after surging 27.6%. This was after clocking 14.87% returns in 2020. As per EMAlpha, Vietnam has been one of the most exciting markets over the past twelve months among the more than 35 Emerging Markets (EMs) that it tracks. The International Monetary Fund’s forecast for Vietnam’s economic expansion is also pegged at a respectable 6.7% for 2021. While Covid-19 has been a difficult challenge for the Vietnamese economy, its recovery has been the best among the countries from its peer group. The VN Index has risen 60.34% in one year period.
Taiwan’s benchmark Taiex index has gained the second spot in the half-year outlook, with a jump of 20.5% during the same period. However, the index took a beating in May following a rise in domestic infections that prompted tighter restrictions. The benchmark index is likely to remain at this high level at the end of the year, UBS Securities Pte Ltd told Taipei Times. As per UBS analyst Ally Chen, this would be despite the rise of Covid-19 infections in Taiwan, as solid corporate revenues and exports should support the index. Ranking among Asia’s top indices, the Taiex index had gained 22.8% in 2020. The index has risen 47% in one year, as of today.
Ranking third was South Korea’s benchmark index Kospi that registered a 14.73% rise in the first half of this year ending June 30. The index soared more than 30% last year. According to the survey conducted by Samsung Securities, some 64% of the company’s 782 high net worth customers, said they look forward to a summer rally in South Korea’s stock market. As per Samsung Securities officials, rising expectations for solid corporate earnings in the second quarter as well as an economic snapback led by the country’s vaccine program were major reasons for the optimistic outlook for the stock market in South Korea. The index has provided 54% as one year return.
Attaining the fourth position in top Asian stock markets for H1/21 is India’s Nifty 50, which recorded a 12.44% growth. The index from India had gained by 14.9% for the full year 2020. This is even after the country battled a devastating resurgence of Covid-19 in April and May. As per Edelweisis’ ‘Earnings Yield Bond Yield Differential model’, Nifty will deliver 8.8% CAGR over the next three years. Nifty FY 22 Earning Per Share (EPS) growth estimate stands at an impressive 42%, as per Bloomberg. Goldman Sachs is also overweight in India and expects the local stock market to outperform. As of today, the index has risen over 46% in one year period.
This was followed by Australia’s S&P/ASX 200 that ranked fifth place in the half-year list with a rise of 11.02%. The index had surged 24% in the last 12 months as of 30 June, the best stretch since the benchmark’s inception. As per analysts, the stock market in Australia is boosted by the economic rebound from the depths of the pandemic and record levels of central bank and government spending. The index has risen 20% in one year period. However, last year, the index fell by 1.45%, as of 31 December 2020.
Meanwhile, China’s Shenzhen component — a standout among the region’s major markets – jumped 4.78% in the first half of 2021. It was Asia-Pacific’s top-performing market with a 38.73% rise in 2020 and has continued to see gains in 2021. The benchmark index from China has risen 13.34% in one year.
Worst performing markets
However, Asia’s economic recovery has varied across countries, depicting a mixed year for markets. This is due to sluggish rollouts of the Covid-19 vaccine in some countries, where small fractions of the population have been vaccinated compared to the West.
The FTSE Bursa Malaysia KLCI Index in Malaysia was Asia-Pacific’s worst-performing market in the first half of the year and dropped 5.8%. The index gained by 2.42% in 2020. Areca Capital Sdn. Chief Executive Officer Danny Wong told Bloomberg last month that Malaysia’s market has been trending down the past few months. “I remain positive on the Malaysia market with the recovery of earnings and business confidence once the vaccination is carried out more effectively in the next few months,” Wong added. The index has gained a mere 0.43% in one year period.
On a similar note, the PSE Composite Index of the Philippines also declined in the first half of the year, by 3.33%. The benchmark index has gained around 11% in one year period. Although, it fell by 8.64% for the full year of 2020.
In comparison to Asia-Pacific stock indices, the S&P 500 registered a 14.4% gain in the first six months of 2021. Market experts currently expect US indices to trade cautiously, that trade near record highs, ahead of the upcoming remarks from the Federal Reserve meeting. The S&P 500 index rose by 15.52% in 2020. Meanwhile, the pan-European Stoxx 600 rose by 13.5% in H1/21. In one year period, the index has gained 23.75%. But, it declined by 3.75% for 2020, as of its December 30 close.
Asia’s economic outlook
As per most economists, Asia is expected to broadly remain on a healthy recovery path over the course of the rest of 2021. According to Fitch Ratings, the recent acceleration of vaccinations in parts of Asia could reduce the risk of setbacks to economic recoveries and public finances associated with further waves of the Covid-19 pandemic. The rating agency anticipates that jurisdictions with higher levels of vaccination will be better positioned for near-term recoveries than those where vaccination rates remain low.
Commenting on emerging economies, Edelweiss said in its July report, “The pace of vaccination in advanced countries is much faster than that in emerging countries. This is reflected in the faster opening-up, and thus, better growth prospects. However, we expect emerging economies to bounce back in H2/FY22, reflecting catchup in economic performance.”
“Global trade rebound augurs well for emerging markets – with both EM exports and imports clocking a growth of 19% and 20%, respectively from April-20 to Mar-21. This further strengthens the case for EM recovery ahead”, the report stated.
Meanwhile, growth forecasts for Asia’s emerging economies like India, the Philippines, Thailand, and Malaysia were slashed by S&P Global recently, as they continue to struggle with gaining control over the coronavirus crisis.
