Asia competes with Brazil for the best stock market performance of 2022

Three stock markets in Asia are vying to become the world’s biggest winners this year, even as a stronger dollar hurt the region’s appeal.

Stock indices in Indonesia, India and Singapore are closing in on Brazil’s Ibovespa index, which is up 5.2% in local currency terms, according to data from leading equity benchmarks compiled by Bloomberg.

Asian gauges were up at least 3.5% each, meaning a single day gain could make up the difference. The rankings are mostly similar in dollar terms, though the earnings differ.

South and Southeast Asian stocks were among the few bright spots this year for global funds, as pandemic reopenings and a tourism revival boosted corporate earnings. Inflation has also remained relatively benign in parts of the region, and improving current account balances have helped reduce the impact of a stronger dollar.

Indian stocks attracted nearly US$6 billion from international investors this quarter, according to data compiled by Bloomberg. And while Indonesia recorded outflows this month, net inflows still totaled more than US$4.4 billion so far in 2022.

Still, South and Southeast Asia may become less attractive after 2023 as investors shift their focus to the cheaper North Asian markets.

“North Asia is expected to outperform in valuation, an improving currency and interest rate environment,” said Frank Benzimra, head of Asia equity strategy at Société Générale SA.

“Investors are also positioning for a rebound in semiconductor industry revenue in the second or third quarter of next year, he added.

With information from Bloomberg