Domestic equities and the S&P 500 have been some of the strongest areas of the market for some time, and while its strength still rings true, there’s one area that has shined even brighter recently—the Asia-Pacific region.
Domestic equities and the S&P 500 have been some of the strongest areas of the market for some time, and while its strength still rings true, there’s one region that has shined even brighter recently. The “core” S&P 500 Index Funds group holds an average score of 4.88 in our Asset Class Group Scores Page, which is 7th of 134 groups, placing it in extremely strong territory at 96th percentile of all groups. However, four of the six groups ahead of the “core” are from some part of the Asia-Pacific region, with Emerging Markets Diversified and Contrarian Strategies being the other two groups ahead of the S&P 500. With the significant presence of the region among the top ranks, is the APAC region worth investing in, and if so, where?
At the very top of the Asset Class Group Scores page, Japan sits in first place with an excellent score of 5.37. The region has benefited from stabilizing inflation and the election of a new prime minister, whose expansionary fiscal policies have sparked “Takaichi trade.” optimism among the country’s investors. The JPMorgan BetaBuilders Japan ETF (BBJP) now holds a strong 5.69 fund score, in addition to a sharply positive score direction of 2.65. Furthermore, the fund holds both near- and long-term relative strength versus domestic equities (SPXEWI).
China has also been a standout region this year, with the group holding a 5.07 score for the third position within Asset Class Group Scores. The country has benefited from several rounds of stimulus this year, in addition to booming AI technology despite escalating tariffs from the US. The iShares MSCI China ETF (MCHI) holds a fund score of 5.65 after moving to a buy signal in May and then back to a positive trend in June. Like BBJP, MCHI also sits on an RS buy signal and columns of Xs versus the S&P 500 equal weight (SPXEWI), highlighting its relative strength versus domestic equities.
Strength within APAC hasn’t been driven just by its two largest economies either. Other countries like South Korea, Vietnam, and Taiwan have seen notable improvement this year as well. The iShares MSCI South Korea ETF (EWY) and iShares MSCI Taiwan ETF (EWT) both sits on three consecutive buy signals and hold near-perfect fund scores above 5.50. However, EWY is in overbought territory with an OBOS reading north of 120%, so those looking to add should wait for consolidation or a pullback closer to support at $81. Meanwhile, the VanEck Vietnam ETF (VNM) holds a solid fund score of 4.95 and is on a potential pullback opportunity after reversing to the middle of the trading band, placing it in actionable territory. While domestic equities are still the strongest asset class within DALI, Asian-Pacific equities do present a compelling opportunity for those needing additional international exposure.
