Asia Stocks on Track to Enter Bull Market as China Rally Extends
Asia’s benchmark stock index was on track to enter a bull market, as China’s reopening and a weakening dollar lure investors back to the region.
The MSCI Asia Pacific Index climbed as much as 1.9% on Monday, taking its advance from an Oct. 24 low to more than 20%. Gauges in Hong Kong, Taiwan and South Korea led gains in the session, while Japan was closed for a holiday.
Strategists have predicted a better year for Asian equities after a dismal 2022, especially as stocks in China, which carry the second-highest weighting in the regional gauge after Japan, turned a corner in November following the nation’s shift away from stringent virus curbs. The bull market milestone comes after the MSCI Asia gauge tumbled nearly 40% from a peak in early 2021.
The Asian benchmark is up 3.7% so far in 2023, beating the S&P 500 Index by about two percentage points. That’s after they both slumped about 19% last year, their worst performance since 2008.
“The rally has been fast and furious, so it is only natural to expect some profit-taking,” said Charu Chanana, senior strategist at Saxo Capital Markets Pte. “There are also some risks to keep a tap on, such as BOJ’s hawkish shift and company earnings. But that being said, there is still room for Asian markets to outperform global peers in 2023.”
Stocks in China have made a strong start to 2023 after being caught in a downward spiral for much of last year amid concerns over the economic toll from virus restrictions. Easing regulatory risks and more support measures to revive the troubled property sector have lent an additional boost to the market, helping the Asia rally.
