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Asian stocks are in the late stages of a bear market


May 11, 2022 ,
Акции Азии и развивающихся рынков находятся на поздней стадии медвежьего рынка

Short-term risks are known but still strong

According to Morgan Stanley, which has a neutral view of the region, Asian and developing market equities are approaching a late bear market period, but gains and valuations are not enough to signify a reversal.

“The dangers are understood, but the weight is still high, and there is a chance of further loss.” “Valuation, regulation, geopolitics, and supply chain concerns have all played a role in the bear market,” the firm’s strategists wrote in a report on Tuesday.

A cycle of Chinese market easing is taking shape

“Due to COVID-induced constraints and a bleaker global outlook, the probable final leg of the Chinese market is likely to be bumpy.” A policy easing cycle is forming, but the timing and extent are dependent on COVID’s management, which indicates beginning risks, according to Morgan Stanley strategists.

Global monetary tightening, soaring inflation, and Chinese lockdowns have all but shattered hopes that Asian stocks could gain traction this year.

In 2022, a four-month downturn wiped out more than $2 trillion of Asia’s market capitalization, and Chinese equity indexes are among the worst in the world.

Morgan Stanley said it prefers Japan’s rate of return, as well as countries that export commodities or profit from higher interest rates.

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