The rally since end-October has pushed the MSCI Asia Pacific Index up by almost 23%, outperforming the US benchmark by the most since 1993 while also beating its European peer. The predominant driver has been China’s reopening, with a weakening dollar giving an added fillip as investors look for recession-proof markets.
With recession worries in the developed world,"the prospect of the Chinese authorities supporting their domestic growth has made both Chinese and broad Asian assets more attractive to global investors,” said Gary Dugan, chief executive officer of the Global CIO Office, an asset manager and financial advisory firm."We have increased our weightings in Asia and see this could have many months of payoff.
BofA’s Asia Fund Manager Survey found 95% of investors expect stocks in Asia Pacific excluding Japan to rise in the next 12 months, and about half of them anticipate double-digit gains. Most of the fund managers are"unabashedly bullish on China,” it added. Even with the rally, Asia’s valuations don’t look stretched. The region’s MSCI benchmark is trading at 12.9 times forward earnings estimates, in line with its five-year median.