In sync in the Asia-Pacific

Key points: 

• Every MSCI Asia-Pacific country index closed above its 200-day average
• Similar participation trends bode well for the continuation of the global bull market 
• Commodities rallied 100% of the time over the subsequent six months

Unanimous participation 

From Seoul to Sydney, Asia Pacific stocks are staging a remarkable comeback.

For the first time since 2021, every single MSCI Asia-Pacific country index is now trading above its 200-day average, reflecting synchronized strength across a region at the heart of global manufacturing. 

As illustrated in the chart below, when over 95% of Asia-Pacific countries exceeded their 200-day averages, the MSCI Asia-Pacific index has historically delivered an impressive 29% annualized return, significantly outperforming periods below this level. 

On the Global Breadth Overview page, you can track 35 participation-based indicators built from 45 global indexes and compare them according to developed, emerging, or regions. As seen below, almost all country indexes reside above their 200-day averages.

A favorable backdrop

Similar shifts in long-term participation trends across Asia-Pacific markets have historically set the stage for a regional benchmark index to advance, with positive returns observed roughly 80% of the time over the subsequent six and twelve months. 

The 1999 instance is an interesting analog, as you had a late-cycle catch-up trade following a dismal period for the Asia-Pacific region in a tech-driven bull market.

The first few months saw the S&P 500 and other major indices tread water. After the pause, indexes generally moved higher over the next three to twelve months, potentially aided by a weaker dollar. The dollar backdrop also provided a tailwind for commodities, which advanced in all cases over the following six months. 

Click here for a link to the study. Additionally, you can find a copy in the Analysts' Backtests section on the website.

What the research tells us...

Global equity markets have seen a meaningful broadening in participation, signaling strength and durability. A key driver of this expansion has been a resurgence in the Asia-Pacific region, where every country index is now trading above its 200-day moving average.

Comparable shifts saw a broad benchmark rally 80% of the time over the subsequent six and twelve months. This synchronized momentum from an area at the core of global manufacturing lends further weight to the case for a sustainable global bull market. The Vanguard FTSE Pacific ETF (VPL) offers access to the region via developed markets.