Last year, China’s economy became the world’s fastest recovering region under the epidemic, the mainland stock market is highly favored by the capital, and even the whole Asia-Pacific emerging markets also benefit. However, the situation has changed since this year, as the dollar rallied, the U.S. economy to start the post-epidemic recovery, Asian stocks have become less attractive, the mainland stock market continued to repeatedly down, the outlook for additional variables.
Foreign news reported that the recent rise in U.S. bond yields has put risk assets under pressure and prompted fund managers to reconsider regional and cyclical risk exposures in their asset portfolios. Rising yields are also increasing the probability of a rising U.S. dollar – a traditional downside for emerging Asia investors – and coinciding with a correction wave in mainland stocks.
Nick Watson, portfolio manager at Janus Henderson Investors, was quoted as saying that without a more supportive policy backdrop in China or a reversal of the reflation expectations seen so far this year, it would be difficult to see a catalyst for Asian stocks to regain their leadership position.
The CSI 300 index is down more than 13 percent from the 13-year high it touched in February, largely driven by investor concerns about valuations and potential liquidity tightening in China. Patrik Schowitz, global multi-asset strategist at J.P. Morgan Asset Management, was quoted as saying that the factor of growth recovery in Asia has largely been reflected in the market. The agency downgraded its rating on emerging Asia stocks to neutral from hold, mainly because of weaker upward momentum on the continent.
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