Photographer: Akio Kon/Bloomberg

Charts Show Potholes in Road as Asia Stocks Rally Most Since '09

  • China’s A-share index shows bearish sign before MSCI decision
  • Indian shares could see decline after world-beating rally

Asian equities have had a good run, but going further will require getting past some looming technical obstacles on charts for China, India and Thailand. The regional equity gauge has been climbing amid improving earnings revisions and the best synchronized growth in global economies in a decade.

At around 154, the MSCI Asia Pacific Index is in an upward channel that puts it on a collision course with its April 2015 high of 157 and its record 173.12, reached in November 2007. The regional bellwether has climbed 14 percent this year, its biggest year-to-date gain since 2009 after the global financial crisis.

The Shanghai Composite Index is still hovering below a key technical indicator before MSCI decides this month whether to include A shares in global benchmarks. The Chinese stock gauge is below the Fibonacci line that represents 23.6 percent of its fall from a high in June 2015 to a low in January 2016. The flat 26-week exponential moving average is also showing no bullish signs.

Read more on what global fund managers are expecting on China’s MSCI entry

Indian stocks may be poised for losses after a rally took the S&P BSE Sensex Index to new highs. The gauge has stayed mostly flat after its climb to above 31,000 in late May. Its moving average convergence-divergence line, or MACD, has slipped below the red signal line, indicating downward momentum. To be sure, the nation’s benchmark gauge is still staying above its 50-day and 100-day moving averages.

India’s trade deficit widened to $13.84 billion in May from $13.24 billion in April, while falling food prices and high debt have sparked protests around the country, pressuring the government of Prime Minister Narendra Modi to provide more incentives.

Thailand’s benchmark index has traded within a narrow range of about 60 points since the start of the year, causing its Bollinger Band to narrow. A tighter range can foreshadow faster gains or losses as volatility theoretically hits a tipping point. The top-performing market in Southeast Asia for 2016 is so far 2017’s worst.

— With assistance by Mark Cranfield, and Sejul Gokal

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