(Bloomberg) — An expected surge in election-related volatility in the U.S. stock market is paving the way for Asian shares to make a run at besting their American peers.
Since hitting an all-time low relative to the S&P 500 on Sept. 2, the MSCI Asia Pacific Index has outperformed the U.S. benchmark by almost five percentage points. That nascent trend is expected to persist at least through the November poll and potentially beyond, according to strategists.
“There is a better than average chance that Asian stocks will outperform U.S. stocks over the course of the next month,” said Eoin Murray, head of investment for international business at Federated Hermes. “The volatility rise will be more pronounced in U.S. risk assets, and will pervade more globally but with less strength.”
Fears about a contested election result and President Donald Trump’s decision not to push for further stimulus ahead of the vote have helped contribute to the recent weakness in U.S. equities. Meanwhile, a growing belief in a Joe Biden victory and Democrats winning control of both houses of Congress is seen benefiting Asian stocks by reviving the U.S. economy and trade flows.
Biden has a 12 point lead over Trump, according to a national poll of likely voters released Sunday, a little more than three weeks before the vote. The Washington Post/ABC News poll was conducted Oct. 6-9.
“The probability of Asian equities’ outperformance will be higher under a Democratic landslide win,” said Nader Naeimi, head of dynamic markets with AMP Capital. “I firmly believe that trend will continue, Asia is under-owned and the U.S. is over-owned.”
Asia will also benefit from China’s strong economic recovery, a weakening dollar that has likely seen an end
Chinese astrology has it that 2020 is a “metal rat” year, and is associated with turbulence. Covid-19 has certainly provided a quantum of it. With a steep market dive in the first quarter, and sharp worldwide economic contraction, Asian business has had a rough ride. As star signs go, 2020 has so far lived up to its ratty astrological reputation.
The results of a survey conducted from August to September of Hong Kong-based Asia Business Council’s members, who are the chairmen and CEOs of some of Asia’s leading multi-national companies, collectively valued at nearly $3 trillion, and with some 3 million employees, offer insights against the turbulent backdrop of a year dominated by Covid-19. With a response rate of 83% (58 out of 70 members), the results showed a latent optimism and the confidence to re-tool investment focus. Though the outlook for job growth remains uncertain, not surprisingly, these leaders ranked public health and geopolitics as top concerns for their businesses.
A lot of numbers follow here, but they are very telling. When asked their outlook for business conditions in Asia over the next 12 months, and in spite of significant declines in their own revenues, half said they expect to see an improvement, while 33% expect conditions to worsen. Though not a table-pounding endorsement, this is a significant change from 2019, when 55% expected conditions to worsen.
Only 16% of members foresee a prolonged downturn or depression, and just 5% anticipate inflation. The wide distribution of an effective vaccine for Covid-19 is viewed as a pre-condition for a return to pre-pandemic economic levels–an opinion expressed by 91%—that speaks well of the latent, “coiled-spring” potential of
Alibaba needs to look for growth beyond China and Southeast Asia in a ‘bipolar world for technology’
- Chinese tech giant Alibaba needs to look beyond China and Southeast Asia in order to sustain current levels of growth, according to Gil Luria, director of research at D.A. Davidson
- Most of Alibaba’s revenue currently comes from its China retail marketplaces that include the Taobao and Tmall shopping platforms as well as its online-to-offline grocery chain.
- The company’s most notable presence outside China is through Lazada, a Southeast Asian e-commerce platform in which Alibaba owns a majority stake.
SINGAPORE — Chinese tech giant Alibaba needs to look beyond China and Southeast Asia in order to sustain current levels of growth, an analyst said Thursday.
With more than 750 million active users in China, Alibaba is at a point where it is beginning to hit saturation, according to Gil Luria, director of research at D.A. Davidson. The company is already talking about lower-tier Chinese cities as potential growth avenues but Luria said the markets there are not as fertile as the top-tier cities and there is already stiff competition in those places.
“Their growth is going to have to come from outside of China,” he said on CNBC’s “Squawk Box Asia” on Thursday. “For them to sustain the levels of growth they have right now, with China approaching saturation, Southeast Asia is only going to carry them for so long before they have to get into some of those other markets in order to sustain this growth.”
Some of those potential growth markets include Latin America and Africa where e-commerce penetration still has room for growth and China has some influence. Alibaba has a presence