Zhitong Finance and Economics learned that with the improvement of the economic outlook, the first that has just emerged in Southeast Asia is expected to continue, and the Fed's policy shift will be another catalyst.
Since Fed Chair Jerome Powell's speech last week, the MSCI ASEAN Index has outperformed the Asia-Pacific and global indices by more than 3%. This extends the index's gains since November, after the index had disappointed for much of the year due to foreign capital outflows and slowing exports from the region.
The Fed's possible rate cut next year, coupled with a weaker US dollar, is strengthening the appeal of emerging markets, while the rapid shift of the ** chain to Southeast Asia, as well as the recovery of tourism, offer better prospects for corporate earnings. Local** measures are also being implemented to support domestic consumption.
Pauline Ng, portfolio manager at JPMorgan Asset Management, said: "Overall, valuations in ASEAN look more attractive than they have been for a long time. Coupled with longer-term structural tailwinds, ASEAN** is likely to provide compelling opportunities for investors. ”
Currently, the forward yield of the regional index is only 129 times, lower than the five-year average of 149 times. According to the compiled data, most markets in the region are trading** below their long-term average valuations.
Kenneth Tang, Senior Portfolio Manager at Nikko Asset Management, prefers domestic markets with attractive growth prospects, such as Indonesia. It is believed that Indonesia will benefit from a gradual policy and its role in the EV battery chain. Currently, the Indonesian Jakarta Composite Index is less than 2% away from its all-time high. He is also optimistic about Vietnam, which has become a manufacturing powerhouse.
However, this is not to say that the future of Southeast Asia** is bright. Headwinds, including a possible recession in the United States and weak external demand, still loom over the region's exporters.
Currently, most economies in the region are expected to grow at a higher rate next year than in 2023, according to compiled data. Any surprise visitor arrivals could boost Thailand**, as tourism is a key growth driver for the country. JPMorgan Chase & Co. increased its stake in Thailand**, in part in anticipation of a continued recovery in the country's tourism industry.
JPMorgan strategists, including Rajiv Batra, wrote in a Dec. 3 note that the MSCI ASEAN Index could rise to the 640-point level in early 2024 due to seasonal trends.