Strategists Bet on Asia to Outperform US Stocks, Survey Finds

A recent Bloomberg survey of strategists and fund managers indicates a strong expectation for Asian stocks to outperform their US counterparts in the current quarter, citing attractive valuations and earnings prospects. The MSCI Asia Pacific Index has already surged 22% year-to-date, surpassing the S&P 500's 14% advance for the first time since 2022, with over two-thirds of respondents forecasting this trend to persist.

Analysis

A late-September Bloomberg survey of 15 strategists and fund managers reveals a strong consensus view that Asian equities are positioned to outperform their US counterparts in the current quarter. This expectation is supported by the year-to-date performance, where the MSCI Asia Pacific Index has registered a 22% gain, notably outpacing the S&P 500’s 14% advance and marking the first such outperformance since 2022. More than two-thirds of the surveyed market participants anticipate this trend will persist, citing the primary drivers as more attractive valuations and superior earnings prospects within the Asian markets compared to the US.

Key Decisions for Investors

• Investors may consider increasing their strategic allocation to Asian equities, potentially through funds tracking the MSCI Asia Pacific Index, to capitalize on the expected continued outperformance.
• Given the consensus view, it could be prudent to evaluate current US equity weightings and consider a partial rotation into Asian markets to capture relative strength.
• The thesis hinges on valuations and earnings, so investors should closely monitor upcoming earnings reports from key Asian companies and relative valuation metrics against the S&P 500 to confirm the trend's durability.