Eoin Treacy's view

For high growth countries in Asia where there is a burgeoning domestic market, the return to performance of major export markets is a tailwind that is being welcomed with a return both to demand dominance in nominal terms. The relative stability of regional currencies is a tailwind to absolute performance which is particularly important for international investors. 

The Asia Dollar Index is testing its highs over the last couple of years and a sustained move below the trend mean, currently near 107, would be required to question medium-term scope for continued upside.

Indonesia’s Rupiah has been largely inert since the central bank intervened to support it in 2015 and the Jakarta Composite broke out to new highs today; extending its uptrend.

Malaysia has underperformed for much of this year, not least because of serial corruption scandals. However, the Ringgit has rallied more than 10%, following a brief spell trading at a new low in January. The Kuala Lumpur Composite Index surged higher today, led by the banks to confirm support in the region of the trend mean.

Singapore’s Financials Index continues to outperform the broader market and is now testing the psychological 1000 level. A short-term overbought condition relative to the trend mean is evident, but a sustained move below it would be required to question medium-term scope for additional upside.

The Philippines Composite bounced last week from the upper side of the underlying two-year range and a sustained move below 8000 would be required to question medium-term scope for continued upside. Meanwhile the Peso is testing the region of its trend mean, but a sustained move below it will be required to question the Dollar’s medium-term uptrend.

The Vietnamese Index has been led higher by Vietnam Dairies and is currently somewhat overextended relative to the trend mean.

These charts support the view that we are in a period of synchronized global economic expansion and Asia represents a catch-up play after what was a multi-year period of underperformance.