And, so much for market getting more pessimistic on the possibility of recession after last week's public relation exercise by Wall Street to claim it is not as bad. In Star Online today, "Market pricing in higher recession odds", the sub-heading reads "Goldman, JP Morgan say chances of downturn still remain".
Not too far off from this blogger's expectectation of the post- "crash" market condition here. There is also the contrarian view such as this Wells Fargo strategist's prediction of 1995 re-run here.
However, the "crash" seemed to be a blessing in disguise. Despite the fear of war in the Middle East and Russia-Ukraine war could erupt with a Ukraine attempt to encroach into Russian controlled area, Malaysia is on the spotlight.
Its getting re-rating from none other than Goldman Sachs, the Investment Bank in a legal dispute with Malaysia in relation to 1MDB.
Bloomberg reported:
(Aug 9): This week’s upheaval in global equities is prompting investors in Asian stocks to turn their attention to markets where their ownership has been falling in recent years, with China and Malaysia fitting the bill.
While the S&P 500 Index has declined 2.8% since last Friday’s poor US jobs data triggered the sell-off, Malaysia’s and China’s benchmarks have both lost less than half of that. Societe Generale SA, Invesco Hong Kong Ltd and UBS Group AG are among those touting China’s attractiveness while Goldman Sachs Group Inc this week upgraded Malaysian shares, citing the market’s defensive nature when it comes to external shocks.
India too is seen winning favor for its fast-growing economy and a domestically driven market. The benchmark NSE Nifty 50 Index is down 1.7% since last Friday.
The resilience of major emerging-Asian markets indicates investors’ “positioning is too light” at a time when their earnings outlook is expected to improve, said Pruksa Iamthongthong, deputy head of Asia equities at abrdn. Their propensity to benefit from potential Federal Reserve interest-rate cuts is better than developed-market peers, she added.
Stocks in Asia witnessed a historic selloff on Monday due to worries over a US recession and bubbly tech stocks, as well as a resurgent yen that caused massive unwinding of a popular global funding strategy. The rout, which was more pronounced than that seen in the US and Europe, has forced investors to reassess their exposure.
China features high on the list. Its cheap valuations have drawn new appetite from global investors who have fled the market in recent years as the world’s number two economy faltered and tensions with the US escalated. The country’s benchmark CSI 300 Index is down 2.6% this year, making it one of the world’s worst performers.
“Mainland Chinese equities dodged the worst of early August’s global selloff, a trend set to continue after their protracted underperformance versus global peers,” Bloomberg Intelligence analysts Francis Chan and Marvin Chen wrote in a note. The outperformance stemmed from “their drawn-out suffering and trough valuations,” they added.
Foreign investors held around 2.7 trillion yuan (US$377 billion or RM1.7 trillion) worth of Chinese onshore stocks as of the end of June, according to figures published by the People’s Bank of China, accounting for around 4% of the market’s total. They turned net sellers in June and July.
The CSI 300 Index is trading at about a 35% discount to the MSCI World Index on earnings-based valuations, according to data compiled by Bloomberg.
For Frank Benzimra, a strategist at Societe Generale, the latest global meltdown has increased “the probability of a rotation” to China from Japan, due to the former’s low valuations and weaker correlations with other markets.
Read on in Thick as a Brick's Forget US, Europe, Goldman re-rating Malaysia