What If COVID-19 Is a BULLISH Signal for Asian-Pacific Stocks?
by Mark Galasiewski
Updated: April 02, 2020
The excerpt you are about to read is from an article published by The South China Morning Post on March 30. Its original title was,
"Five questions every investor should be asking about the coronavirus and what it will next do to stock markets."
You are about to see some eye-opening market research that may completely change how you view this pandemic as an investor.
In fact, you may want to see more evidence after reading this excerpt. Says its author, our own Mark Galasiewski,
"I will show the technical justification for a secular bull market in emerging markets in our April 2020 Global Market Perspective, which publishes on April 3."
Our regional letter, the monthly Asian-Pacific Financial Forecast, also comes out on Friday, April 3. You'll find instant subscription links to both below the excerpt.
Here it is:
Is a virus-triggered downturn different from an ordinary financial crisis?
In many ways, yes.
US Federal Reserve chairman Jerome Powell stressed that the US economy, the world's largest, was fundamentally strong before the pandemic and predicted that it will rebound quickly once the virus's spread is controlled. That makes today's situation different from, say, the 2008-2009 global financial crisis, which was caused by underlying financial problems.
But the modern world has never been assaulted by a pandemic of this scale, and its threat to global GDP is undeniably real, as is the danger -- pointed out by US infectious disease expert Anthony Fauci -- that this coronavirus come back until there is a vaccine.
"We're dealing with a pandemic economic crisis that, at this stage, is medically unstoppable, which is flat-out scary, which we only thought existed in Stephen King's horror stories," AxiCorp's Innes said.
"We tend to overlook that during the  Lehman[Brothers' bankruptcy] crash, outside the financial sector, life went on. In essence, restaurants took bookings; taxis took rides; shops were still bustling. This time around, the entire world is on the precipice of shutting down. Unemployment will soar," Innes said.
Indeed, US unemployment already has, skyrocketing to an unprecedented 3.3 million claims last week alone -- up from about 200,000 just three weeks ago.
Yet Galasiewski, chief equity analyst for Asia and emerging markets at Elliott Wave International, is positively bullish. His study of infectious diseases has lead him to see them as long-term buy signals in the local markets. Sars in 2002, for example, led to a tremendous bull run in Hong Kong. He is now especially bullish on stocks listed in China, where the coronavirus outbreak began.
"A big advance has begun in the main Asia and emerging market indexes. This is not just a rebound. It's the early stages of a secular bull market," he said, referring to a long period of rising stock prices due to policy supports.
It's Hard to Be a Contrarian Investor
It's hard because market trends, bullish or bearish, tend to extend farther than many contrarians expect.
That's why to succeed as a contrarian investor, you need more than just to "buy when others are selling," or vice versa.
You need a timing tool. Like Elliott wave analysis.
See, market trends are most likely to reverse when their Elliott wave pattern is complete. Sooner or later, this global sell-off will be over. But it won't be over until Elliott waves say so.
We can help you time that moment.
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