The Asian market's outperformance is just beginning

Asian stock markets have performed strongly this year and outperformed global markets with increased inflows and positive economic policies across Asia drawing investors.

- Alethea Leung portfolio manager Man Group

We believe the rally is just getting started and the opportunities extend beyond China into other Asian economies.

China's stock market is rallying, led by technology giants like Alibaba, and Asian markets more broadly have surged, as the chart below illustrates. In September the MSCI Asia ex Japan Index sat at a four-year high, up 25% year to date, with potential for further gains supported by robust corporate earnings revisions.

There are several reasons why we believe the outlook for Asian markets is positive. The weakening US dollar, positive structural shifts in China, and supportive monetary and fiscal policies across economies are all likely to support company earnings and valuations.

Turning to the depreciation of the US dollar, this will improve liquidity in Asia which will help boost corporate earnings and drive asset reflation. As the US central bank cuts interest rates, US investments will appear less attractive to investors, likely prompting a search for in higher returns in Asian markets. That inflow of capital will likely fuel returns on Asian investments.