The Asian equity gauge has outdo its US and European peers this year

by BLOOMBERG

SINGAPORE • Asian stocks headed for a record close for the second time this month as the regional benchmark gauge surpassed its 2007 peak, led by energy and industrial stocks after US equities continued their bounce from a two-week slide.

The MSCI Asia Pacific Index rose 0.6% to 172.67 as of 4:37pm in Hong Kong yesterday. The gauge passed its 2007 closing high on an intra

day basis on Nov 9 but didn’t hold the level. Japan’s Topix Index climbed for a second day yesterday, rising 0.3%, after its worst week in seven months. Hong Kong’s benchmark Hang Seng Index breached the 30,000 level for the first time in a decade, boosted by China banks and energy stocks. India’s S&P BSE Sensex added 0.4%, with foreign buying of the nation’s stocks so far this month on course to be the highest since March.

The Asian equity gauge has outperformed its US and European peers this year, led by surging Chinese stocks such as China Evergrande Group and Sunac China Holdings Ltd.

Tencent Holdings Ltd’s share price has more than doubled this year, beating Alibaba Group Holding Ltd to become the first Chinese technology stock to break the US$500 billion (RM2.06 trillion) market value barrier. The MXAP Index has advanced 28% in 2017, versus a 16% increase for the S&P 500 Index.

Taiwan chipmaker Vanguard International Semiconductor Corp was the regional benchmark’s best performer yesterday, surging 9.9%, while South Korea’s Lotte Corp paced gains with a 5.4% jump after Lotte Group chairman Shin Dong-bin sold a 3.57% stake in Lotte Shopping via block trading on Tuesday. TDK Corp rose 5.9% in Tokyo, while Mirae Asset Daewoo Co jumped 6.2% in Seoul.

Here’s what a few investors and strategists are saying:

Timothy Moe (analyst at Goldman Sachs Group Inc)
• Earnings growth has been the main driver of the gains this year for MSCI Asia Pacific ex-Japan Index, according to a report published yesterday.

• Corporate profits, which accounted for 19 percentage points of the index’s 30% advance so far this year, will also push stocks higher in 2018.

• Macro growth should remain firm, driving a 14% rise in profits.

• The second half of 2018 could bring challenges as central banks around the world scale back stimulus.

Mark Matthews (head of Asia research at Bank Julius Baer)
• Asian markets will continue to go up given the perpetual correlation with US stocks and there’s no reason for US to enter a bear market.

• Expects investors to allocate more money in China.

• Investors were too bearish on China in the past, but the country’s rapidly ascending IT sector and its reforms are turning the nation to a “core” bet to fund managers.

• China is also the cheapest market in Asia.

Hao Hong (chief strategist at Bocom International Holdings Co)
• Asia is still in a cycle of earnings improvement which will continue to support the benchmark index.

• The MXAP gauge is heavily weighted toward information technology companies which are showing strong earnings.

• Monitor growth momentum of technology giants that have been leading gains. — Bloomberg