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Asia’s Biggest Market Winners Get Hit In Latest Volatility

Asia’s Biggest Market Winners Get Hit In Latest Volatility

(Bloomberg) -- Thursday’s rout on Wall Street saw many of the standout performers from this year’s epic risk-asset rebound lead markets lower. The same dynamic was evident in Asian markets Friday.

Here’s a look at how some of the region’s best-performing assets in the rally are faring in the latest downdraft:

Korean Stocks

Korean stocks looked first in line for a pullback, after the benchmark Kospi Index’s more than 50% surge from its March 19 low. That made it the second-best performing stock market in the world, trailing only Argentina’s 90% rebound. The Kospi had risen to more than two standard deviations above its 50-day moving average, an extended technical level which preceded selloffs in the gauge in the past. The index slumped as much as 4.2% Friday.

Asia’s Biggest Market Winners Get Hit In Latest Volatility

Aussie Dollar

The Australian dollar was the worst-performing Group-of-10 currency Friday, sliding for the second day against the greenback. The currency had seen the biggest gains of the group in its rebound against the U.S. dollar from its March low -- a surge of as much as 28%. That had pushed the Aussie well into overbought territory, according to its relative strength index, which had risen to its highest in over two years.

Asia’s Biggest Market Winners Get Hit In Latest Volatility

Airline Stocks

One sector which didn’t look overstretched, yet still slumped Friday, was airlines. Like many gauges of airline stocks around the world, the Bloomberg Asia Pacific Airlines Index had only begun a meaningful rebound this month. After a 12% gain last week, it is set for a more than 6% decline this week, as fears of a second wave of coronavirus cases pummel global travel and leisure stocks.

Asia’s Biggest Market Winners Get Hit In Latest Volatility

“While some investors could see this as a fresh opportunity to reload on equities, we continue to stress the importance of differentiation and sector selection,” said Tai Hui, a strategist at JPMorgan Asset Mamnagement. “While some extremely cheap sectors, such as energy, airline and travel have benefited from the recent rally, they are still the most vulnerable sectors to another round of outbreaks and the pace of recovery will be slow even if we manage to avoid a second wave.”

Value vs Momentum

Meanwhile, Asia’s factor investors can be forgiven for not knowing if they are coming or going. After a strong start to the month for value shares, which beat their momentum peers in five out of the first seven sessions in June, Friday saw them underperform for a third straight day. Month-to-date there is little to differentiate the two rival factors.

Asia’s Biggest Market Winners Get Hit In Latest Volatility

Crude Oil

The price of West Texas Intermediate crude almost doubled in May, albeit off a low base following the rout that for the first time ever saw front-month futures dip below zero. This week it’s on course to decline for the first time since April as swelling stockpiles reignited concerns about excess supply -- just as demand worries resurfaced with the new spikes in some coronavirus hotspots.

Asia’s Biggest Market Winners Get Hit In Latest Volatility

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