Equities: A Rare Super Long US Bull Market and What that Means for Asia

Technical Analyst - Global with an Asian focus, Aletheia Capital

Chris Roberts

Technical Analyst - Global with an Asian focus

Independent and original Asian investment research

Aletheia Capital

Aletheia Capital (HK) Ltd. (previously known as Asianomics) combines the extensive knowledge of its experienced team with technology and regulatory changes to disrupt Global Markets business in Asia. The firm is completely independent with no conflicts of interest either on Investment Banking advisory or Capital Markets execution.

Technical Analysis

MSCI AC Asia ex Japan Index / Technical Analysis

MSCI AC Asia ex Japan Index (MXASJ INDEX)

The MSCI Asia Free ex-Japan (MXASJ – 686) recently set a new all-time high of 694, finally moving above the 2007 peak of 689. The region joins a growing list of benchmark indices that have finally recouped all of the losses incurred during the Global Financial Crisis bear market.Our base case has been that the MXASJ will surpass 800, before the bull market that started in January 2016 ends. That is no longer an exciting target, it’s just more than 16% above current levels. Of course, just because a target is not exciting, is not a compelling reason to change it.  In recent months we have been mulling over a number of positive factors that suggest interest in region could get a lot more intensive, including:<ul><li>The ongoing rare super long bull market in the U.S.</li><li>The new signal from our Long-Term Asset Allocation model to Overweight Asia ex-Japan vs. the MSCI World (MXWO) given at the end of August.</li><li>Our Junk Attack! Indicator remains in the Risk-On zone, having entered that zone in mid-July 2016.</li></ul>Our new target calls for 50%+ more upside for the regional benchmark.

The MSCI Asia Free ex-Japan (MXASJ – 686) recently set a new all-time high of 694, finally moving above the 2007 peak of 689. The region joins a growing list of benchmark indices that have finally recouped all of the losses incurred during the Global Financial Crisis bear market.Our base case has been that the MXASJ will surpass 800, before the bull market that started in January 2016 ends. That is no longer an exciting target, it’s just more than 16% above current levels. Of course, just because a target is not exciting, is not a compelling reason to change it.  In recent months we have been mulling over a number of positive factors that suggest interest in region could get a lot more intensive, including:The ongoing rare super long bull market in the U.S.The new signal from our Long-Term Asset Allocation model to Overweight Asia ex-Japan vs. the MSCI World (MXWO) given at the end of August.Our Junk Attack! Indicator remains in the Risk-On zone, having entered that zone in mid-July 2016.Our new target calls for 50%+ more upside for the regional benchmark.

MSCI Asia Free Ex-Japan: More Bullish…50%+ Upside