Asian stock investors lose $44 billion in July

Collectively, emerging Asia’s 10 key stock indices, from Karachi to Seoul, saw $43.9 billion wiped from their value. With the US Dow Jones Industrial average in its worst rut in 20 years, global gloom among investors has spurred the sell-off in Asia, ending rallies in the South Korean, Indonesian and Thai equity markets.

July’s biggest percentage loser was the Jakarta Composite Index, which dropped 8.2 per cent. Capitalised at $25 billion, it had been the region’s second-best performer in the first half, just behind Karachi’s 39-per cent surge.

Valuations remain attractive, but investors are unlikely to be tempted into buying, as long as the downside risks loomed. “For both (Indonesia and Thailand) markets, you’ll probably see 20 per cent upside before you get comparable with the historic average for the last 10 years,” ING’s Rosgen said.

Other major percentage losers in July were India’s Sensex index and Taiwan’s TAIEX, which fell 7.9 per cent and 4.1 per cent respectively. Indian equities were sold despite an easing of tensions between nuclear-armed neighbours India and Pakistan over the disputed Kashmir region.

The region’s outperformers were Shenzhen B-shares, up 1.6 per cent in July, and Karachi, which added one per cent. But fund managers were doubtful the Shenzhen rally, sparked by talk of possible purchases of local bank stakes by foreign investors, was sustainable.

“Notwithstanding the fact that it’s performed well, China looks overvalued to us, so it doesn’t affect the way we invest,” said Anthony Muh, regional head of investment for Asia at Citigroup Asset Management. (Reuters)