The stock market performance in the first month of a year is supposed to have some predictive effect for the rest of the year. This is at least statistically proven for the US market. But we see also some evidence for other markets and want to start our regular stock market performance ranking by showing some first trends for the Asia-Pacific markets in January.[mepr-active membership=”1734″ ifallowed=”show” unauth=”message” unauth_message=”Please login or purchase a membership to view full text.”] Without any empirical proof, we believe that the returns in January can give at least a good idea where the markets are heading during the next months.
As can be seen in the graph above, the best-performing market in Asia-Pacific in January has been Hong Kong. The Hong Kong HSI index gained almost 10 percent during this first month of the year. The main performance drivers have been banks and property companies. The top ten gainers in the index increased between 17 and 36 percent during this first four weeks alone.
On the next places, India, which increase by almost 6 percent in January, followed by China, which gained a bit over 5 percent. China, the worst performing APAC market in 2017, is now catching up some momentum due to a better than expected economic growth. India, on the other hand, has been among the top three performers in 2017, continues to follow up on this strong momentum. The country is still favored by many analysts due to its positive economic outlook.
On the lower end of our performance ranking are Japan, Australia, and New Zealand. Australia has been the second worst performing market in Asia-Pacific in 2017 with an increase of ‘only’ 8 percent. Australia’s stock market hardly advance during January. Japan and New Zealand are lagging sharply behind in January after having shown an excellent performance in 2017 with 19 and 22 percent respectively.
In comparison, Euro Stoxx 50 advanced 3 percent in January (6 percent in 2017), S&P 500 rose almost 6 percent (19 percent in 2017), and the MSCI World advanced by nearly 4 percent (16 percent in 2017).
We expect Hong Kong, Singapore, and South Korea to continue performing well during the next months. The three countries have still a reasonably priced stock market with a p/e of below 15. The countries will also strongly benefit from China, which we believe continues to have a stable growth this year. We also expect India to perform well and end up the year with a double-digit return. GDP growth is forecasted at above 7 percent this year. But the stock market has currently a market p/e of around 25 and is therefore not cheap bet anymore.
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