KUALA LUMPUR, July 30 (Bernama) -- Bursa Malaysia's key index closed at an intraday high today, supported by continued buying interest even as renewed geopolitical tensions and a weaker overnight lead from Wall Street following the US Federal Reserve's (Fed) decision to stand pat on interest rates weighed on broader sentiment. The Fed has decided to hold rates steady for the fifth consecutive meeting, with the Federal Funds Rate unchanged between 3.50 per cent and 3.75 per cent. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 4.84 points to 1,720.40 from yesterday’s close of 1,715.56. The benchmark index, which opened 1.14 points lower at 1,714.42, hit its lowest level of 1,710.69 in early trade before gaining momentum for the rest of the day. However, the broader market was negative with losers outpacing gainers 581 to 411, while 612 counters were unchanged, 1,173 untraded, and 87 suspended. Turnover declined to 2.49 billion units valued at RM2.25 billion from ...
As emerging market investors recalibrate their portfolios, the focal point is shifting from China to its Asian neighbors, Taiwan and India. Both nations have been experiencing record stock rallies, leading to significant weightings of over 19% each in the MSCI Emerging Markets (EM) Index, closely trailing China's current 22.8%. This marks a substantial decline from China’s 40% peak in 2020, according to Bloomberg data.
Taiwan and India are emerging as preferred alternatives, fueled by their respective strengths in technology and infrastructure. Taiwan is making notable strides with its semiconductor prowess, highlighted by Taiwan Semiconductor Manufacturing Co., a major supplier to Nvidia Corp, which has seen its market valuation surge. India, under Prime Minister Narendra Modi, continues to capitalize on its tech and digital economy sectors, supported by government modernization initiatives.
Despite China's previous dominance in the MSCI EM Index due to its booming e-commerce and luxury goods sectors, recent years have seen a decline influenced by regulatory crackdowns and a beleaguered property sector. This shift is prompting fund managers to seek diversification in other emerging markets to mitigate risks associated with China's volatility.
The Taiex Index in Taiwan has soared by 33% this year, making it one of the top global performers. Conversely, India's Nifty 50 Index has also shown strong performance with a 12% increase in 2024, reaching new heights on promises of policy continuity from the Modi administration. Meanwhile, Chinese stocks have languished, showing minimal gains and underscoring the urgency for economic reforms.
Emerging markets excluding China are seeing robust earnings growth, with Taiwan and India both reporting at least a 13% increase in forward earnings estimates. This contrast with stagnant earnings revisions in China underscores the growing appeal of Taiwan and India in the investment landscape.
Key Takeaways:
- Taiwan and India are increasingly preferred in EM portfolios, closely approaching China’s lead in the MSCI EM Index.
- Both markets benefit from strong sectors: Taiwan in semiconductors and India in technology and infrastructure.
- Regulatory challenges and economic issues have dampened China's attractiveness, leading to its reduced weighting from a 2020 peak.
- The robust performance of Taiwan’s Taiex and India’s Nifty 50 indices contrasts with the stagnation of Chinese equities.
- Forward earnings for Taiwan and India show promising growth, enhancing their appeal to investors.
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