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Southeast Asia's outperformance to continue

Mark Shirreff Matthews and Jen-Ai Chua
Mark Shirreff Matthews and Jen-Ai Chua7/20/2022 02:36 PM GMT+08  • 7 min read
Southeast Asia's outperformance to continue
Visitors enjoying a light show at the Vinpearl Grand World Phu Quoc in Vietnam, one of the favoured Southeast Asia markets by Julius Baer, together with Singapore and Indonesia / Photo: Bloomberg
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Year-to-date, three of the five best-performing stock markets in Asia are in Southeast Asia. Adjusted into US dollars, their total returns are between –0.7% to –12%. The region lifted Covid-19 restrictions in the last few months only, so is experiencing post-pandemic demand now.

We expect it to remain resilient despite monetary tightening and global recession risks. Over the last 34 years, in previous periods of heightened recession risk in the US and rising bond yields, Southeast Asian markets outperformed.

Current factors that would support a firm showing include a boost from international re-opening (which has lagged domestic re-openings), a buffer provided by commodity prices like palm oil, rubber and rice, whose prices are still 20% to 50% higher than their 10-year averages; inflation that is relatively benign, and last but not least, a less aggressive rate hike and tightening cycle compared to the US.

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