Market Outlook

Asian markets rallied into the month of April with all markets registering gains except Malaysia. The best performing market was Singapore and Taiwan. Singapore charged ahead with strong performance seen in the banks buoyed by better than expected quarterly results. Similarly, Taiwan’s strength also came from strong quarterly results led by technology sector. China and Hong Kong gained on evidence that the Chinese economy is recovery as seen with a pick up in PMI and new factory orders. The MSCI inclusion of China’s A-shares has also played a part in the market’s rise. The year to date gains for China had almost recouped all the losses from 2018. Korean equities edged out a small gain weighed down by weakness in the Korean Won. India inched up as the Reserve Bank of India cut interest rates. Thailand and Indonesia continue to wait for the official outcome of their general and Presidential elections. Philippines bounced as Standard & Poor’s upgraded its credit rating. The recommencement of some of the Belt & Road Initiatives projects in Malaysia failed to boost the market as consumer sentiment remained weak. 

Investment Strategy & Outlook

Last month, we wrote that US/China news flow of trade war will begin to surface more, dominating the headlines, especially now that reporting season is over. The risk of a potential no deal on the US/China trade war has cast a cloud on the Asian markets. In the near term, we believe uncertainties will remain. However, on a brighter note, a pause in US rate hike is a welcoming factor for Asian markets continues to be a strong factor for the region. With a vacuum now of reporting season and more newsflow on the trade talks, we still believe investors will reward based on fundamentals over the longer term. We continue to be vigilant and would take profits if fundamentals do not support our view and will look to buy into weaknesses. The strategy mantra remains to be “buy on weakness, sell on strength”. We are also cautious as we head into the month of May, if indeed another Sell in May and go away takes place. In the immediate term, we see some potential risk of no deal on the trade war, official local elections results in India, Indonesia and Thailand. 

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