Investor Excess Goes Global as Signs of Froth Emerge in Asia
A trader works on the floor of the New York Stock Exchange (NYSE) in New York, U.S. (Photographer: Michael Nagle/Bloomberg)

Investor Excess Goes Global as Signs of Froth Emerge in Asia

Asia’s financial markets are showing signs of froth as investment pours into nations that have so far contained the coronavirus better than their Western counterparts.

South Korea’s Kospi stock index is among the best performing major equity markets worldwide in 2021, China’s share benchmark is near a record and Japan’s Nikkei 225 index has scaled a new peak in dollar terms. An Asian currency gauge is on one of its longest winning streaks in more than two decades.

“The market is excited about vaccine development and distribution, pretty much riding on the momentum since the end of last year,” said Tai Hui, chief Asia market strategist at JPMorgan Asset Management. “Investors are trying to find markets that still offer value, or have lagged behind.”

Here’s a closer look at some of the optimism in Asian assets:

Seoul Train

In March the Kospi index suffered its biggest one-day drop since October 2008 and closed at the lowest level since 2009. From there, South Korean equities went on a rebound rally and have more than doubled, culminating with a record high this month.

Investor Excess Goes Global as Signs of Froth Emerge in Asia

Tokyo Top

The Nikkei 225 reached a record in U.S. dollar terms this week, aided by a strengthening in the yen. Japan’s stocks have climbed even as the nation expanded a virus-related state of emergency to cover 60% of the economy.

Investor Excess Goes Global as Signs of Froth Emerge in Asia

Beating Bitcoin

The cold weather in Asia has triggered some spectacular asset moves that have eclipsed Bitcoin in the case of Japan power futures. Power contracts have surged 13-fold since the beginning of December, while the cryptocurrency has gained around 100% over the same period.

Investor Excess Goes Global as Signs of Froth Emerge in Asia

Margin Mania

A surge in the total balance of margin transactions has helped to boost Chinese equities in recent weeks. The balance, running at levels last seen in 2015, is closely associated with the rise of the ChiNext and other mainland indexes.

Investor Excess Goes Global as Signs of Froth Emerge in Asia

Tech Frenzy

The Bursa Malaysia Technology Index has risen more than three times in value from the depths seen in March 2020, handily beating Malaysia’s main stocks index. The nation this week imposed the first nationwide emergency since 1969, a step that gives the government more power to tackle a surge in Covid-19 cases.

Investor Excess Goes Global as Signs of Froth Emerge in Asia

Currency Climb

Asian currencies are on course to appreciate for an eighth straight month against the U.S. dollar, the longest streak for more than two decades. The Bloomberg JPMorgan Asia Dollar Index, which tracks 10 regional currencies, remains in a bullish uptrend as cash flows into the region.

Investor Excess Goes Global as Signs of Froth Emerge in Asia

Dumbfounding Stock

Finally, shares in electronic-parts maker Delta Electronics (Thailand) Pcl have jumped more than 1,000% over a year. That’s left market watchers -- and even the company -- puzzled, and generated a warning from the local stock exchange about volatility.

Investor Excess Goes Global as Signs of Froth Emerge in Asia

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