Today (March 24) the Asia-Pacific market is finally in high spirits. Instead of following the trend of US stocks in the past, a collective counter-offensive was staged today.

In an effort to avoid another lending crisis, the Fed announced its latest move to buy unlimited amounts of bonds, sending the dollar lower and boosting emerging markets.

However, despite the rebound in Asian stock markets on Tuesday, market watchers remained cautious:If the economic damage caused by the COVID-19 epidemic is close to the global financial crisis, market sentiment, liquidity and corporate earnings could deteriorate significantly.

A major concern for stock market investors remains the extent to which the novel coronavirus pandemic will affect the economy and corporate profits as the number of infections continues to rise and countries continue to block it.

In other wordsCan stimulus policies briefly boost market sentiment, or can it be difficult to ward off the economic crisis?

Chetan Seth, strategist at Nomura Holdings, wrote in a report:

As more and more countries declare city / state / national confinement, it is becoming increasingly clear that the current COVID-19 epidemic will have a significant impact on GDP and earnings prospects. In our opinion,The second round of knock-on effects of these measures will have a significant impact on economic growth.

According to real-time statistics released by Johns Hopkins University in the United States, the number of confirmed cases worldwide has exceeded 380000:

Here are four pictures that may explain why many investors are still cautious about this "counterattack" and "rebound in a bear market".

The pessimistic technical side

From a technical point of view, Asian stock markets are likely to worsen before they get better.

Although the Morgan Stanley Capital International Asia Pacific Index (MSCI Asia Pacific Index) has fallen from its peak in 201835%But it is still not close to the biggest decline during the global financial crisis, which has fallen from a high in 2007 to a low in 200959%。

Figure 1: resistance to the technical side of Asian stock markets

After the MSCI Asia Pacific Index fell below the 11-year support lineThe 50-day moving average of the index has now fallen below the 200-day line, forming a so-called death crossover pattern (Death Cross).

Supplementary reading:

Global capital outflows may not be over yet

The 12-month rolling foreign capital flows of most Asian countries have turned toNegative valueBut the proportion of the sell-off is still small relative to the market capitalization of the Asia-Pacific stock market, far below the level of foreign capital outflows in 2008-2009. The Asia-Pacific market has reached new highs in recent years.Investors worry that the outflow of foreign capital is not yet over.

Figure 2: the outflow of foreign capital has just begun

During the last financial crisis, foreign capital outflows from Japan reached 95.5 billion US dollars, but now it is only 1.8 billion US dollars. According to the latest news, Japan is considering postponing the Tokyo Olympic Games until 2021, casting a shadow over the Japanese economy, which already lacks stamina.

However, it should be pointed out that the current overall valuation of A shares is relatively reasonable and may not be greatly affected. Li Chao, vice chairman of China Securities Regulatory Commission, said at the weekend.

In the stock market, from the beginning of this year to now, in fact, the net outflow of foreign capital from the A-share market is about more than 20 billion yuan. But in fact, the scale of this net outflow is not large, and at present, foreign capital accounts for less than 4% of the market capitalization of the A-share market, and the proportion of transactions is not very large. So,Foreign capital flows disturb the A-share market, but it is not a subversive or fundamental impact.

Corporate profit expectations are likely to be further lowered.

Morgan Stanley Capital Asia Pacific Company covered by InternationalEarnings expectations for the next 12 months are down by about 13% from their peak.While the peak level fell during the global financial crisis58%。

Figure 3: more profit forecasts may be on the way

Given that the impact of the epidemic on the economy is likely to last for several quarters, which meansAnalysts are likely to further cut their EPS forecasts.

The US Stock Intelligence Agency mentioned earlier thatAnalysts are indeed constantly revising their corporate earnings forecasts. Analysts' growth forecasts for S & P 500 companies have been further cut, according to a survey by analysts from financial data firm Refinitiv.

Figure 4: quarterly EPS growth forecast for S & P 500 companies

• In the week of March 12, analysts expected the year-on-year EPS performance of S & P 500 companies for the four quarters to be as follows:-1.3%、+2.7%、+7.7%、+10.2%；

• In the week of March 19, analysts' EPS forecasts were downgraded, and the year-on-year performance was expected to be:-2.9%、-1.8%、+4.7%、+8.4%。Which meansAnalysts expect the impact of the epidemic to spread into the second quarter (Q2), and the economy will recover more slowly than previously expected.