Buffe by the renewal of Covid-19 cases across the region and investor concern over inflation, Asian stocks are falling further behind their global counterparts.
The MSCI Asia Pacific index fell 3.2% this week, and is down 2.7% in May. That paved the way for the worst monthly activity since March 2020 – when markets took the biggest hit from the pandemic. The regional outlet is also tracking MSCI’s broader range of global equities for a quarter of a month, and market observers point to several reasons why this deficit may continue.
While inflation has risen as the immediate concern for equity investors internationally, confidence in Asia has also been hit due to the worsening Covid-19 outbreak from Taiwan to Singapore. Game upgrades are slowing down and prices are still high in some areas of development, analysts say.
Banny Lam, head of research at CEB International Inv Corp. expect.”
The worst of this week’s sales came after data on Wednesday showed US consumer prices rose in April by the most since 2009. The MSCI Asia Pacific index fell 1.8% on Thursday.
The virus is another major wounding point for Asian investors. Singapore, one of the top performing markets in Asia this year, saw its market cap as 3.2% on Friday, the highest in the region, as the city said it would return to lock-in positions it was ordered last a year ago to contain a rising number of untraceable infections.
At the same time, India, Japan and other parts of Southeast Asia are also fighting a new crisis in cases and restrictions, including slow vaccination rounds and delays in clearing border borders of concern for investors.
“You have to have a strong immunization program to be able to open up and reunite with the rest of the world and keep the virus on the coast,” said Mark Matthews, head of Asian research with Bank Julius Baer & Co. “Unfortunately, most Asians do not have a very strong immune system.”
Having led global equity gains in 2020, Asia is the untapped partner in the US and Europe in 2021. While the Asian base has changed slightly for this year, the S&P 500 Index and the Stoxx 600 Index are both at 11 points. %.
Time also seems to have played a role in the recent auction. May has historically been the worst month for the MSCI Asia Pacific Index, with a 2% decline over the past 10 years, according to data compiled by Bloomberg.