Alroy Commentary - What are investor favourites in North Asian market?
Following up on weekly commentary - Investors favor North Asia market, which we roughly argued some reasons that global investors shifted their focus to North Asian, we are going to discuss which countries are on investors’ favourite list.
China is on the top of the list, as economists believe that recent economic slowdown has come to an end. In fourth quarter, the export should benefit from the recovery of the U.S. and Europe. Manufacturing activity reached its six months highest in September, factory output and fixed asset investment also increased. In addition to fundamental improving, China equities are relatively cheap comparing others emerging market stocks.
South Korea is another investors’ favourite. In second quarter, Korean GDP grew faster than expectation by 2.3%, but inflation remained low, then Bank of Korea still have a room to maintain interest rate at low level. Korean government has implemented a $15 billion fiscal stimulus since April to boost economy. However, Korean markets haven’t full reflected those positive factors, so it is still a room for Korean asset to rise.
Even though the Fed’s decision was a surprise to North Asian market, the FOMC’s unclear tapering schedule was a risk to Asian market. Shifting focus on North Asian market is still not the best move, but there are good opportunities.
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