It’s always interesting to look at how the stock markets start into a new year. The month of January is supposed to have some predictive power for the rest of the year. Studies for the US market show that if January ends with a positive return, the probability that the year will end with a profit is around 90 percent. Although this statistic is valid for the US market, we can see similar effects for other stock markets.[mepr-active membership=”1734″ ifallowed=”show” unauth=”message” unauth_message=”Please login or purchase a membership to view full text.”]
In this regard, the Asia Pacific markets give a mixed picture so far. Six out of fourteen Asia Pacific markets we are tracking are up between one and four percent in January. Five Asia Pacific markets are down between two and seven percent. And three markets remained almost unchanged in January. However, the MSCI Asia Pacific Index gained nearly 3 percent in January, after an increase of 13 percent in 2020.
Many analysts are bullish for the Asia Pacific region this year. And they have good reasons for that. First, many Asia Pacific countries managed to get much better through the pandemic than the Western countries. Second, many Asia Pacific countries’ indebtedness due to corona aids for the economy and the population remains moderate compared to European countries and the US. Furthermore, many markets in Asia Pacific are still reasonably valued compared to Europe and the US, which both have run hot lately.
We expect that normality will slowly return to the daily life. Either by progress in the immunization of the population or by better adapting to the pandemic. Taiwan, South Korea, China, Hong Kong, Australia, and New Zealand have given a good example in dealing with this pandemic. Let’s see if these countries’ market performance will also continue to reflect this progress so far.
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