Investors’ comments on Asia market volatility

Asian share markets rebounded on Tuesday reversing a historic sell-off after central bankers sought to calm investor fears.
Japan’s Nikkei rallied 9.4 per cent as of the midday break, after plunging 12 per cent on Monday in its biggest one-day percentage drop since October 1987.
Currency markets remained on edge, with the yen down 1 per cent after rising for five straight sessions to a seven-month high on Monday.
QUOTES
RON SHAMGAR, HEAD OF AUSTRALIAN EQUITIES, TAMIM ASSET MANAGEMENT, SYDNEY
“My view is that this market turmoil is mostly driven by the yen carry trade being partly unwound. That’s happened on the same day where U.S. jobs numbers came in slightly weaker than expected and a potential imminent attack by Iran on Israel.
“Combine those factors with a market that so far hasn’t seen the usual and bi-annual pullback or correction of 5-10 per cent this calendar year – and you had a so-called rug pull. We think volatility will persist over the next few weeks and stock prices direction will be dictated by the upcoming results season in Australia and the U.S. during late August.”
GARY NG, SENIOR ECONOMIST FOR NATIXIS, HONG KONG
“It is hard to say the worst is behind us … pressure might linger a little bit.”
“There are many moving parts, with three key concerns come from the outlook of the U.S. economy, the unwinding of investors’ trades in Japan and geopolitical risks in the Middle East … particularly the last one, which has not been fully realised for now. As for the U.S. recession outlook, we see some sectors in the economy like consumption still holding up, and datasets in the coming weeks might come out not as bad as the surface looks, and it may help stabilise things.”
ANDREW JACKSON, HEAD OF FIXED INCOME, VONTOBEL, LONDON
“Last week’s soft U.S. jobs data has continued to wreak havoc across markets, with many asset classes, sectors and regions suffering major declines. The first step of this price correction was in line with our expectations based on the recent data; but we are likely now entering an overshoot territory.
“That said, the fact remains that markets are generally still at or near highs, so the severity of the correction remains unclear. Corporate bonds remain well insulated from the market shock, so any outflows, which could be a catalyst for further declines in already stressed markets, are likely to be muted and we even see a possibility for inflows.”
ROB ALMEIDA, GLOBAL INVESTMENT STRATEGIST AND PORTFOLIO MANAGER, MFS INVESTMENT MANAGEMENT, BOSTON
“It is hard to know what the stress point for the sell-off was. We think it’s a combination of many factors that have led to too many leveraged trades heading for an exit that can’t fit all of them.
“Many wonder whether the market is overreacting. Price is what you pay and value is what you get. The price of risk assets was too high and value (i.e., returns on equity) we believe was below what people have been expecting. Volatility is the market adjusting for incorrect assumptions, which brings us back to the prior question, the market’s expectations about incomes, we think, was too high. While profits or earnings have yet to crash, markets discount it before it happens via tangential evidence – which is perhaps what it got last week.”

(Compiled by the Global Finance & Markets Breaking News team)