The risk environment can be assessed by looking at the region's stock market performance
A glimpse of the region’s stock market performance as of yesterday (excluding China, Japan and the Philippines), based on a one year perspective. [charts below from stockcharts.com, yahoo finance and Bloomberg]
First the outperformers.
New Zealand’s NZ 50 at record highs (+16.42% year to date, left window), while Singapore’s STI (+4.95%) has fully recovered from October lows (right window).
The record high India’s Sensex got dumped 3.89% this week (!!!) to break from the one year trend line. Has this signaled the inflection point? We shall see.
Now to the laggards…
Taiwan’s TWII (left) seems to have been left out of the massive rally of sibling China’s Shanghai Index. The TWII has rebounded only halfway from the low of October vis-à-vis highs of July and presently seems under pressure (-1.95% y-t-d).
Meanwhile, Australia’s All Ordinaries (AORD) seems to be approaching the October lows!!! (-2.17% y-t-d). Deflating bubble mate?
Like the AORD, Hong Kong’s Hang Seng (left) has been creeping back to the October lows (-3.14% year to date). The HSI has diverged from the Shanghai bubble, despite the Shanghai-Hong Kong Connect
Meanwhile the record low currency, the dong, has translated to the clobbering of Vietnam’s Ho Chi Minh index (-4.29% y-t-d; right)
The Phisix look alike, the Thai SET has broken down from her support levels. This possibly indicates of the ‘double top’ formation in progress.
The SET crashed 5.18% this week but remains 16.65% up y-t-d.
Crashes has become real time and spreading!
The South Korean KOSPI looks like in danger from a massive head and shoulder pattern. Like the HSI and the AORD, the KOSPI seems to be testing the October lows!!! (-4.46% year to date)
The 2008 low rupiah has so far failed to dent on the JKSE which continues to drift near record highs.
Nonetheless, the Indonesian bellwether appears to have formed a minor head and shoulders formation. (+20.73% y-t-d)
Finally Malaysia’s KLSE has been in the process of fulfilling a head and shoulder bearish formation. The KLSE was down .94% this week and -7.18% year to date
The once sizzling hot Malaysian bellwether which have been the first to break to record highs appear to be playing the opposite role.
The above represents the weekly performance of Asian bourses. Losses have been significant and dominant. Importantly, quasi crashes has emerged in Vietnam and Thailand.
Remember these market pressures comes amidst easing by the BoJ, PBoC and the ECB.
The bottom line is that the region’s market breadth has evidently been deteriorating where deflationary forces has been gaining momentum in the face of weakening currencies, diminishing liquidity, collapsing commodity prices, high debt levels and slowing economic growth.
Eventually deflationary forces will overwhelm the region's entire risk asset spectrum.
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