Asia - Economic Data & News 02 (Jul 16 - Dec 25)

[winston]

Foreigners Bought $5.1 Billion Asia Stocks In Just 5 Days

By Shuli Ren

Foreign investors are returning to Asia with a bang.

In the last five days, foreigners net bought $5.1 billion of emerging Asia stocks excluding China and Malaysia, data provided by Credit Suisse shows. China and Malaysia do not provide daily portfolio flow data.

Investment banks are growing nervous with the sudden, strong enthusiasm for Asian stocks. We have not seen such large net foreign buying since April 2014. Korea and Taiwan took in substantial chunks, $1.9 billion and $1.7 billion respectively.

Credit Suisse’s equity strategist Sakthi Siva reiterated her year-end MSCI Asia ex-Japan target of 550, which offers only 4% upside.

Meanwhile, Morgan Stanley‘s global equity team downgraded emerging markets and re-iterated its Sell call on Japan: “Morgan Stanley Downgrades Emerging Markets, Remains Sell On Japan“.

Year-to-date, the iShares MSCI Emerging Markets ETF (EEM) rose 11.7%, the Vanguard FTSE Emerging Markets ETF (VWO) jumped 12.7%.

Source: Barron's Asia

[winston]

<Research Report>Nomura: Warning Indicators Show Greatest At-Risk Region in Asia, Particularly PRC, HK

Nomura, in its report, mentioned that it has recently created multiple indicators, signaling at least two-thirds of the past 50 financial crises in 30 countries since the early 1990s.

The warning indicators showed that the greatest at-risk region is in Asian, particularly PRC and HK. Crisis signals are at their highest point since the 1997 Asian financial crisis.

The broker pointed out that Asia's maturing and over-sized financial cycle will remain a major structural drag on GDP growth in coming years.

The reversal of Asia's financial cycle could be abrupt.

The broker identified six potential triggers:
1. faster than expected Fed rate hikes,
2. stronger USD,
3. major EM corporate default,
4. large RMB devaluation,
5. inflation shock in Asia and
6. political instability.

Source: AAStocks Financial News
Web Site: www.aastocks.

[winston]

3:12 AM ET
Foreigners Bought $7.8 Billion Of Asia Stocks In Just 8 Days

By Shuli Ren

A bull market for Asian stocks?

In the last five days, foreigners net bought $7.8 billion of emerging Asia stocks excluding China and Malaysia, data provided by Credit Suisse shows.

China and Malaysia do not provide daily portfolio flow data.

Credit Suisse started compiling the daily inflow data in 2003. Inflow surge of this magnitude was seen only three times before, in September 2010, April 2011 and September 2013.

Does this data point signal the top? Equity strategist Sakthi Siva does not think so, because well, emerging Asia markets have been unloved for so long. Siva wrote:

While the surge in net foreign buying over such a small time period does worry us, we highlight that net foreign buying on a rolling 12-month basis is still 0% of market cap versus 1.3% in September 2010, 1% in April 2011 and 0.8% in September 2013.

Source: Barron's Asia

[behappyalways]

ASEAN’s South China Sea ulcer
http://www.newmandala.org/aseans-south-china-sea-ulcer/

[winston]

Global Flows: Japan Sold, But Asia Ex-Japan Attracts Interest

By Robert Guy

Investors pared their holdings in Japanese stocks ahead of last week’s anticlimactic meeting of the Bank of Japan.

Investors sold $803 million of stocks via mutual funds and ETFs between July 21 to July 27 and foreign investors dumped $1.2 billion, according to data from broker Jefferies. Asia ex-Japan stocks saw $3.2 billion of interest.

Here’s the broker’s view of where the money is flowing to in Asia;

In Asia, foreign investors stayed solid buyers in Taiwan and Korea.

Foreign investors have also been consistent buyers in Indonesia, Thailand and the Philippines.

In China, ETFs/mutual funds continued to experience inflows (the second time in more than a year that mutual funds recorded net buying) but the size of the injection was rather light.

Source: Barron's Asia

[winston]

5 Reasons to Buy Asian Stocks

By Robert Guy

Bank of America Merrill Lynch is out today banging the drum for investors to load up on Asian stocks, making the case for investors who are underweight to be double-weighted in Asia ex-Japan/emerging markets in their benchmarks.

The broker argues that
(1) Asian equities look better value at 8.5 times EV/EBITDA compared to 13.6 times for U.S. stocks,
(2) Asian EPS growth expectations are low at 2% and bottoming out,
(3) Asian currencies are now more competitive, and
(4) state-owned enterprises with low returns on equity are much smaller portions of major indices in China and India than in the past.

But the big reason the broker is upbeat is their forecast that returns on equity for Asia ex-Japan stocks could rise from 11% to 14% over the next three to four years.

Here’s BAML in their own words;

But the ROE drop from 16% to 11% from 2010 to 2015 was mainly driven by the drop in asset turns from 90% to 60% – tighter fiscal and monetary policies, and the drop in China’s nominal GDP growth from 18% to 6%. The good news is that real interest rates are falling for a majority of Asian markets, and fiscal policy is easing in most of them.

A rise in asset turnover in the region in the next two-three years is highly likely – we think from 60% to 80%. Based on these four ROE drivers (capex/GDP, currency, fiscal and monetary policy), China, Korea, Thailand, Singapore and Taiwan lead the pack in ROE prospects; India, Malaysia bring up the rear.

And the good news is that the higher ROEs will translate to higher price-to-book valuations over the coming few years;

From 1.4x today, Asia ex-Japan’s PB could rise 45% in the coming 3 years – 26% to get back to fair value, 19% if the ROEs rise from 11% to 14% as we project. We have already seen 20% increases from the lows of the year, so we expect more to come.

In our view, the time to be a bearish philosopher is over, the time to participate in a bull market has (already) arrived. Given the recent rally, risk-love is a bit elevated – any weakness in markets should be viewed as an opportunity, we believe.

Source: Barron's Asia

http://blogs.barrons.com/asiastocks/201 ... an-stocks/

[behappyalways]

Who is Most Dependent on China?
http://www.bloomberg.com/news/articles/ ... t-on-china

[winston]

HSBC Says Re-rating of Asian Stocks “Difficult”, Cuts Singapore

By Robert Guy

HSBC’s Asian equities strategy team has taken a closer look at the prospects for the region’s stocks and concluded that any re-rating is unlikely in the short term given low expectations for earnings growth.

Source: Barron's Asia


http://blogs.barrons.com/asiastocks/201 ... singapore/

[winston]

HSBC Says Re-rating of Asian Stocks “Difficult”, Cuts Singapore

By Robert Guy

HSBC’s Asian equities strategy team has taken a closer look at the prospects for the region’s stocks and concluded that any re-rating is unlikely in the short term given low expectations for earnings growth.

Source: Barron's Asia


http://blogs.barrons.com/asiastocks/201 ... singapore/

[winston]

<Research Report>G Sachs' APAC Stock List with Improving Growth of Profit (Table)

Goldman Sachs, in its Asia-Pacific stock market strategy report, picked stocks in the region with improving growth in profit:

Shares

Ctrip.com
JD.com
CHINARES CEMENT (01313.HK)
PETROCHINA (00857.HK)
South Korea - Hanwha Chemical
South Korea - SK hynix
ANHUI CONCH (00914.HK)
PING AN (02318.HK)
Alibaba
SHK PPT (00016.HK)
India - Adani Ports & SEZ
Taiwan - ASE Group (2311.TT)
CHINA LONGYUAN (00916.HK)
Singapore - Capitaland Commercial Trust
Vipshop

Source: AAStocks Financial News