Precise Investors Editorial Team
MSCI’s broadest index of Asia-Pacific shares outside Japan was on track for new highs after a seven-day rally, gaining 0.3%
Asian stocks stabilised after a wobbly start on Tuesday, with sentiment hurt by geopolitical tensions.
MSCI’s broadest index of Asia-Pacific shares outside Japan was on track for new highs after a seven-day rally, gaining 0.3% as benchmarks in Taiwan and South Korea both hit their highest level on record.
Nikkei 225 added 0.9% and CSI 300 increased 1.2% as markets opened after a holiday. S&P 500 e-mini futures were up 0.3%.
Meanwhile, U.S.’ S&P 500 slipped 1.0%, erasing the past week of gains, as fears over the displacement effects of AI on software and other industries pushed the Nasdaq Composite 1.1% lower. A bearish analysis from Citrini Research on the possible risks to the global economy took a further toll on jittery investor sentiment.
The report was “getting a lot of airplay”, said Tony Sycamore, market analyst at IG in Sydney. It does align with quite a few fears which are out there, he added.
Asia equity markets don’t have the exposure as such to the mega-tech stocks, but they’re still quite exposed to the AI revolution – they’re doing well because there’s still that exposure to AI, without the valuation concerns, he added.
Shares of companies that were at the centre of the recent rally risked getting caught out on stretched valuations, said Rupal Agarwal, Asia quant strategist at Bernstein in Singapore.
Stocks that have done the best over the last 12 months in Asia and the U.S. have seen too many investors chasing these names, to an extent not seen outside of the 2000 or 2020 cycle, she said.
She added: With valuations at a record high and earnings revisions showing signs of peaking, the risk of reversal in these stocks is high.
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