BEIJING: As frustration over China’s equity performance increases, some of Asia’s other major markets are emerging as more attractive alternatives for global investors.
The divergence has been on full display this week. A key Chinese stock gauge saw losses from its recent peak reach 20% just as South Korea’s Kospi flirted with a bull market and benchmarks in India approached all-time highs.
Japanese stocks hit a three-decade high earlier in May while Taiwan continues to outperform most stock markets around the world.
A shift in Asia-focused portfolios seems to be underway as those major markets decouple with China, surging despite concerns that a slump in the region’s largest economy will drag on equities elsewhere.
Glowing prospects for world-leading chipmakers in South Korea and Taiwan, a revival of inflation in Japan and India’s booming consumption are among the tailwinds boosting their stocks just as China indexes become global laggards.
“There are absolutely numerous opportunities within Asia outside of China,” said Christina Woon, investment director of Asian equities at abrdn plc.
“South Korea gives you exposure to a great number of companies within the battery and tech supply chain, Taiwan is home to more than just Taiwan Semiconductor Manufacturing Co, and Japan gives you access to global leaders in their fields.”
Overseas inflows into Japan have continued for seven straight weeks through mid-May, while South Korea and Taiwan have netted at least US$9.1bil (RM42bil) each this year, reversing outflows of 2022.
By contrast, global fund allocations for China have dropped back to October levels, according to HSBC Holdings Plc. Fund sales to domestic customers in May slumped to their lowest since 2015.
Bullish Wall Street calls on China – dominant until a few months ago – are falling flat as a faltering economy and geopolitical tensions turn key gauges into global laggards.
Manufacturing activity continued to slump in May, adding to the bleak outlook. — Bloomberg