Investors in Asia equities are learning lessons that students of Newtonian gravity, statistical mean reversion and Buddhist karma have known for centuries: what goes up, eventually comes down; and what goes around, eventually comes around. Having enjoyed blockbuster returns of more than 25% in 2020 (via the MSCI Asia ex-Japan Index), investors in Asia have had to content themselves with returns of –1.2% this year.
Therefore, having significantly underperformed, are Asia’s equity markets poised to spring back in 2022, as they did in 2020? Unfortunately not, in our view. Asia is still consolidating, repairing and normalising; and underlying economic and market conditions indicate a muted, if not challenging, outlook for regional markets in the year ahead.
Weak earnings momentum
