Asean countries Stocks ‘At Risk’ says, JPMorgan
Stock markets in Indonesia, Malaysia, Thailand and the Philippines are “at risk” and investors should take profits based on technical indicators, according to JPMorgan Chase & Co.
Monthly, weekly and daily charts all show weakness in the markets of the Association of Southeast Asian Nations, with Phillipine equities in the early stages of a potentially “large breakdown,” JPMorgan analysts Sunil Garg and Michael Krauss wrote in a report dated yesterday.
Benchmark indexes in the Philippines, Malaysia, Thailand, and Indonesia have rallied between 6.7 percent and 21 percent in the past 12 months, beating the MSCI Asia Pacific Index’s 2 percent gain as Southeast Asia was deemed as a safe haven from a global slowdown because of the region’s consumer market.
Malaysia’s benchmark index slid to the lowest level in more than two months yesterday on concern the nation’s economic growth is slowing. The stock market’s “recent performance appears capped by election uncertainty,” the analysts wrote.
Malaysia has refrained from joining other Asian nations in lowering interest rates as price caps on essential goods kept inflation contained and Prime Minister Najib Razak’s increased spending ahead of a general election that must be called by early 2013 bolstered the economy.
“Amidst the backdrop of consensus longs in four Asean markets, we see similar, stretched chart patterns and, at the minimum, recommend taking profits in Asean and exit overweights,” Garg and Krauss wrote. “Malaysia and Philippines are most at risk.”