Against the backdrop of the Federal Reserve's interest rate cut, stock markets in the Asia-Pacific region have collectively gone on a spree.
The Indian stock market is setting new daily highs, the Nikkei 225 index has once again broken through the 38,000 point mark, and the stock indices of Singapore and the Philippines have also reached new phase highs.
Today, after the People's Bank of China announced a series of supportive policies, the FTSE China A50 index futures saw an expansion of gains to 5% in the afternoon, and the Hang Seng Index and Hang Seng China Enterprises Index achieved a ten-day winning streak.
Some billionaire investors on Wall Street have recently increased their bullish bets on the Chinese stock market.
The strong fundamentals of the Indian and Japanese stock markets, coupled with the Federal Reserve's interest rate cut, have led the Indian SENSEX index to set new historical highs on last Friday, this Monday, and today, touching 85,000 points during today's trading session, with a year-to-date increase of over 17%.
Despite high valuations, Modi's successful start to his third term has strengthened investors' confidence in policy continuity, coupled with the Federal Reserve's interest rate cut and the limited options for investors amid global market turmoil, leading to the return of overseas investors who had previously left the Indian stock market.
Media data shows that foreign capital has net bought $8.5 billion worth of Indian stocks this quarter, which will be the largest scale since mid-2023, and the Indian stock index is also expected to record six consecutive quarters of gains.
James Cheo, Chief Investment Officer of HSBC Global Asset Management, said: "Despite high valuations, the Indian stock market is still attractive compared to other markets with weaker growth prospects.
At the same time, India's economic growth can continue to be supported by strong corporate performance and favorable economic conditions and supportive policies."
At the same time, the Federal Reserve's first rate cut in four years has also triggered the latest round of sector rotation.
Rate-sensitive sectors such as automobiles and finance have been boosted by the rate cut, traditional industry sectors such as fast-moving consumer goods have also performed well, while technology stocks have performed poorly.
Another major stock index in Asia that has repeatedly broken records - the Nikkei 225 index - also opened higher today and broke through the 38,000 point mark for the first time since early September.
Since Japan introduced corporate governance reforms, overseas investors have continued to be bullish on Japanese stocks.
The Bank of Japan's interest rate hike process has not been enough to threaten the rise of Japanese stocks.
At the same time, similar to the Indian stock market, Japanese stocks are also facing sector rotation.
As a further advancement of the previous corporate governance improvement plan, the Tokyo Stock Exchange recently asked companies to disclose plans to improve price-to-book ratios and return on equity, especially for companies with price-to-book ratios below 1 times and return on equity below 8%, most of which are small and medium-sized enterprise stocks.
Drew Edwards, an investment manager at GMO, said that Japanese regulators are turning their attention to small-cap stocks, urging them to achieve higher returns, and the inclusion of small-cap stocks in this governance reform will greatly increase their valuation.
Moreover, small-cap stocks have relatively low valuations, which can create more favorable entry conditions for investors.
Southeast Asian stock markets have also benefited from the interest rate cut.
On Monday (September 23), the FTSE Straits Times Index in Singapore reached a new high since 2007, with a year-to-date increase of over 12%.
The Philippine Composite Index also reached a new high since February 2022, rebounding 20% from the low point in June, entering a technical bull market, with a year-to-date increase of 15%.
Before the Federal Reserve's interest rate cut, global investors were already bullish on Southeast Asian stock markets.
Media data shows that as of last week, overseas funds have been flowing into Southeast Asian stock markets for the fifth consecutive week, pushing the MSCI Asean Index close to its highest level since April 2022.
Among the top 5 best-performing Asian stock markets so far in September, 4 are from Southeast Asia.
Chun Hong Lee, portfolio manager at Principal Asset Management, said: "As the Federal Reserve starts the interest rate cut cycle, as long as there is no economic recession, the rise of Southeast Asian stocks and bonds can continue until the end of next year."
Local supportive policies, attractive valuations, and low investor positions are also favorable to Southeast Asian stock markets.
Kenneth Tang, portfolio manager of Nikko AM Shenton Thrift Fund, said that Indonesia's fiscal easing policies, and Thailand and Malaysia's measures to encourage investors to hold shares by introducing more deposit certificates (DR) and exchange-traded funds (ETF), have all driven foreign interest in these economies' stock markets.
Among them, industries sensitive to interest rates and capable of obtaining high returns, such as real estate and banks, will benefit even more.
Based on this, Nomura has upgraded the ratings of Malaysia and Indonesia, and Goldman Sachs has upgraded the ratings of Thai stocks.
At the same time, the 12-month forward price-to-earnings ratio of the MSCI Asean index is still below the five-year average.
John Foo, founder of Valverde Investment Partners, said: "After being neglected for a long time, there are many investment opportunities to gain alpha in Southeast Asian stock markets, such as Indonesian commodity stocks, Malaysian technology stocks, and Vietnamese export enterprise stocks."
Chinese stock market is bullish among billionaire investors.
As the surrounding markets in the Asia-Pacific region are bullish, the Chinese stock market has also ushered in supportive policies.
The latest 13F regulatory filings also show that Wall Street billionaire investors such as Appaloosa Management founder David Tepper and "Big Short" Michael Burry still insist on being bullish on the Chinese market.
Alibaba remains the largest holding of Tepper in the second quarter, and he also increased his holdings of JD.com, KE Holdings, and two Chinese exchange-traded funds iShares China Large Cap ETF and KraneShares CSI China Internet ETF.
Burry also increased his holdings of Alibaba in the second quarter, which has become his largest holding, and other technology stocks such as Baidu and JD.com also appeared in his portfolio.
The so-called 13F filing is a disclosure made by institutions managing more than $100 million in equity assets to the U.S. Securities and Exchange Commission (SEC), detailing the institution's holdings of U.S. stocks and the related directions of funds.
Institutions required to submit 13F filings include hedge funds, trust companies, pension funds, insurance companies, etc.
BCA Research recently upgraded the rating of mainland Chinese stocks to buy, and the institution's strategist Jing Sima expects mainland Chinese stocks to outperform the global stock market passively.
George Boubouras, Managing Director of Research at K2 Asset Management, said, "Tactically, dynamically biased" to increase holdings of Chinese stocks.
Eric Lin, Head of Research for Greater China at UBS, frankly stated, "Chinese companies' earnings this year are very robust, which will push up the Chinese stock market in the short term, at least until the end of this year."
He raised the target price of the MSCI China Index by 10% by the end of this year.
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