India and Singapore offer Asia’s best chance for a “December rally” in stocks while Indonesia may post the strongest gain, Macquarie Group said, citing the region’s historical returns.

 

Indian and Singapore shares have advanced in December 87.5% and 80% of the time, Macquarie analysts Daniel McCormack and Henry Hon wrote in a report dated yesterday. They also said Indonesia has yielded an average 7.9% during the last month of the year, the most among 10 Asian markets.

 

“In terms of countries, Indonesia gives by far the strongest monthly return in December,” the analysts wrote. “But if, on the other hand, you want to maximize your chances of a positive return for the month then you should build positions on India and Singapore.”

 

The MSCI Asia excluding Japan Index has gained 3.3% in the first four days of the month, bringing its rally for this year to 67%. The measure has risen in December for seven of the past 10 years, according to data compiled by Bloomberg.

 

South Korean and Hong Kong shares have been the weakest in December, offering average returns of 1.1% and 2%, respectively, the analysts said, without saying what historical period they analyzed. No Asian market tracked in the report has averaged a negative return during the month.

 

The advance by Asian stocks may slow in January, which has an average return of 1%, compared with 3.7% for December, the analysts said. For the first quarter, Taiwan may be the strongest performer, having averaged 9.8% gains in previous years, while China may be the weakest, after declining an average 5.1%, according to the report.

 

“Despite conventional wisdom, January is not a particularly strong month for Asian equities,” they wrote. “It may be that investo