Asian stocks rose sharply on May 22, after modest gains by US stockmarkets. The United States Dollar came under pressure due to the political turmoil in Washington. The MSCI's widest Asia-Pacific shares index outside Japan went up bu 0.9 percent. The upside in Asian stocks was best since April 25. For the MSCI emerging stocks, gains exceeded 17 percent. This is in contrast with the eight percent clocked by world index. Investors, however, are wary of how things are playing out. Carl Berrisford of UBS Wealth Management, said that at present market valuations, investors are advised to adopt a proactive approach. This can be done by picking stocks across a number of sectors. Low quality stocks are also offloaded for better performing ones. The analyst put forward this opinion citing valuations close to their peak.
Confidence and restrictions
The rise was helped by gains in Hong Kong and Australian stocks. This rise happened despite a number of fresh curbs being imposed by regulators on the latter's property markets. It is evident that investors have lost confidence in American economic policy.
According to Alex Wong of Apple Capital, these restrictions will not make much of an impact on the market. This is as the buyers will concentrate as usual on primary market. These measures will be felt more on the primary market than the secondary market. Wong is a fund manager at his company. The Hong Kong headquartered company manages approximately $130 million.
US stocks went up on May 19 but closed below session highs due to fresh concerns about the Trump administration. This occurred after there were two new media reports of the possible coordination between Trump's election campaign and Russia. Marc Chandler of Brown Brothers Harriman, noted that escalation of the investigation into the involvement of Russia threatens to take attention, resources and also time away from the Trump economic agenda. The currency strategy global head also reminded that the Trump administration has already gathered a lot of skepticism.
The US dollar, in the foreign exchange markets, dropped to lowest levels in recent six months on May 19. It went against peer trade weighted basket at 97.080. It was trading a little above this figure on May 22. As per calculations by Commodity Futures Trading Commission and Reuters data, the euro's net long positioning shot up to its peak in three years in week which ended May 16.