By Eric Lam
(Bloomberg) -- Emerging Asian economies are ahead of the curve when it comes to a post-virus recovery, and that is translating into some of the world’s best equity returns this year by a wide margin.
A group of about 180 stocks from the emerging Asia Pacific region have posted total returns of 19% on average this year, well ahead of other geographies around the world, according to a Bloomberg analysis of 3,000 global shares. Eastern Europe is the only one of the six other regions that has posted a positive return this year, with a mere 2% gain, according to data compiled by Bloomberg.
The benchmark MSCI Emerging Markets Asia Index has recouped its losses for the year thanks to a run of gains in July, while the MSCI All-Country World Index remains down about 5% for the year, the data show.
Most of the top-returning stocks this year have ties to health care and medicine, with latex glove manufacturer Top Glove Corp., surgery devices maker Microport Scientific Corp. and vaccine developer Cansino Biologics Inc. leading the way with total returns of almost 300% each.
Ruchi Soya Industries Ltd., a maker of soy products in India, and chip foundry Semiconductor Manufacturing International Corp. are also in the Top 10 after returning at least 180% this year.
The emerging Asia grouping is also enjoying a rush of positivity from analysts, with estimated price targets up 4% in the past month, compared to a 2.7% average across the wider universe of stocks, according to data compiled by Bloomberg. The group’s estimated earnings per share growth of 25% over the next 12 months compares favourably with an increase of just 6% projected for companies from North America.
The improving earnings picture is part of a wider trend of decelerating downgrades identified by Goldman Sachs Group Inc. strategists including Timothy Moe. The MSCI Asia Pacific ex-Japan Index has seen consensus earnings downgrades slow to just 0.7% in the past month, from 8.1% in the past three months.
“North Asia markets are observing broader signs of recovery with more demand from re-opening economies like the U.S.,” the strategists wrote Friday. “Given the market’s sector skew toward new economy and its first mover status on economic reopening, China may still see the most resilient earnings revisions as supported by the latest economic data.”
Chinese stocks surged in Shanghai and Hong Kong Monday amid positive commentary on the market from state media.
“China’s domestic recovery seems on track,” the Goldman strategists wrote.
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