Asia’s improving earnings scorecard is failing to boost stock prices as Covid-19 effects linger

Name: HSBC doubles down on Asia in massive staffing overhaul
Uploaded: 2020-11-15T14:00:18.000Z
Duration: 4 min 41 s
Description: HSBC doubles down on Asia in massive staffing overhaul

Companies in the MSCI Asia-Pacific Index have delivered an aggregate positive earnings surprise of 7.7 per cent so far

The lack of impact suggests this is really ‘a matter of longer than expected Covid-19 effects,’ says IG Asia analyst Jingyi Pan

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An investor looking at stock prices in a Shanghai brokerage. Vaccine breakthrough has helped fuel global stocks last week. Photo: AP

Bloomberg

Published: 10:00pm, 15 Nov 2020Updated: 10:00pm, 15 Nov 2020

Corporate Asia is wrapping up a solid bounce-back quarter when it comes to earnings, but that is hardly translating into stock gains for companies.

With majority of the results out, companies in the MSCI Asia-Pacific Index have delivered an aggregate positive earnings surprise of 7.7 per cent so far, according to data compiled by Bloomberg. That is versus a 23 per cent aggregate miss in the previous quarter. Yet in both earnings seasons, shares of the reporting firms have risen less than 0.5 per cent on average on the first day post results.

“I would assign the lack of stronger gains more to the outlook concerns, much like how US earnings failed to elicit further positive reactions in the latest third-quarter releases,” said Jingyi Pan, market strategist at IG Asia Pte. “Using Singapore as the example here, it really is a matter of longer than expected Covid-19 effects. The year-end recovery is now a 2021 recovery. If this continues, a second half of 2021 recovery … Who knows.”

The post-earnings reaction also goes to show the difficulties investors are facing in parsing results as the virus and vaccine updates continue to sway the outlook. The latest reporting season also saw traders grappling with the added uncertainty related to the US election.

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HSBC doubles down on Asia in massive staffing overhaul

The MSCI Asia-Pacific Index has risen just about 8 per cent since mid-August in the current results season, much less than the 18 per cent gain seen in the prior period, when earnings disappointed.