- About Us
- Products & Solutions
- Industry Solutions
- Thought Leadership
- News Room
- Contact Us
|
by Elvin Thean AS OF OCTOBER 2010 European Indices (UK, France, Germany, Switzerland)
European equities rallied strongly late August to October, up 10% in absolute terms, on the back of positive macro surprises and speculation about a second wave of quantitative easing in the US. European economic data continued to surprise on the upside in September after remaining resilient throughout the summer. US and China macro momentum turned positive again to overcome the soft patch in late Q2. The Fed started to prepare the markets for additional long term asset purchases, leading to strong performance of equities and other risky asset classes, such as commodities and emerging market, up respectively 12% and 20%, as well as a renewed weakness in the USD, down 7%. Sector-wise, Cyclicals performed the best with Mining and Autos at the top (up 25% and 16% respectively), while Banks and Utilities underperformed. Even though European equities rallied strongly during the past two months, their valuation remains attractive and below typical mid-cycle level, as earnings expectations were constantly upgraded during Q3. The MSCI Europe trades at 12m forward P/E of 11.0x as compared to 12.5x in April, when investor sentiment was particularly confident. Australia, Hong Kong, Singapore
The Australian ASX200 index gained 1.7% in October after September’s 4.1% rally, marking the first back-to-back monthly rises since February-March. Resources (+5.1%) outperformed as expectations of the Fed's monetary stimulus boosted commodity prices. AUD gained 1.7% against USD but slipped on other major crosses; a decision by the RBA to leave rates unchanged took the shine off the bull case. Hong Kong's equity market continued to climb amid improving market sentiment, robust retail sales figures, and strong pickup on tourist arrivals. The Hang Seng Index rose to a YTD high on 14 Oct and closed the month up 3.3%m/m. MSCI HK has outperformed the region by 0.3%m/m, but underperformed MSCI China by 1.8%m/m. MSCI China rose 3.8% over the past month, outperforming MSCI EM by 1.5%. Financials was the best performer (+7.9% m/m) followed by energy (+6.9% m/m), and healthcare was the worst performer, down 5.4% m/m. The Singaporean FTSE Straits Times Index rose 1.5% m/m in Oct 2010, but slightly underperformed the regional benchmark, the MSCI Asia-Pacific ex-Japan Index, by 20bps (+1.7% m/m). The Singapore dollar appreciated to a record high vs. the USD, boosting returns. The exchange’s proposed merger with the ASX was a significant event. Korea (KOSPI)
South Korea's KOSPI edged up 0.9% from the previous month. The market’s focus has been mostly on Q3 earnings result, which has moderately surprised on the upside. Transportation equipment and machinery outperformed, up 12.4% and 8.2% on the back of the firm Q3 results. Iron & Metal was the weakest performing sectors, down 7.4%. Japan (Nikkei 225)
The BoJ left its policy on hold as expected; details of the asset purchase program and the Outlook Report offered mixed signals about a willingness to ease. The bank announced it will buy BBB rated corporate bonds (as well as a-2 rated CP); previous purchases were limited to above A (a-1). The purchase size of the J-REIT was small at ¥50 billion, although this in part simply reflects the small size of this market. The real GDP forecast for FY2011 was marginally revised down.
|
Copyright © 2013 JPMorgan Chase & Co. All rights reserved.
print