November 28, 2022

Pedestrians wearing protective masks walk past the Bombay Stock Exchange (BSE) building in Mumbai, India on Thursday, January 21, 2021.

Dhiraj Singh | Bloomberg | Getty Images

India stocks were among the top performing markets in Asia Pacific in May, though the country continues to grapple with tens of thousands of new cases every day.

For the month, the Nifty 50 rose 6.5% while the BSE Sensex rose 6.47%.

“The old phrase ‘go and sell in May’ was wrong – at least for this month,” said Tuan Huynh, chief investment officer for Europe and Asia-Pacific at Deutsche Bank International Private Bank. “In the Indian case, I find that relatively surprising.”

“The markets seem to like to differentiate between economic and apparent corporate earnings performance versus the rise in new cases,” he told CNBC’s Street Signs Asia on Tuesday.

India has registered more than 28 million infections so far and is the second hardest hit country in the world in terms of case numbers, according to Johns Hopkins University. Daily cases have declined from a record high of over 400,000 in early May – but remain above 100,000. That is still quite high compared to other countries in the world.

The US investment bank Goldman Sachs is “overweight” in India and expects stocks there to outperform.

“Markets, as they say, tend to live in the future, not the present,” Timothy Moe, co-head of Asia Macro Research and senior Asian-Pacific equity strategist at Goldman Sachs, told last week CNBC.

He pointed out that there was a “very worrying humanitarian crisis” in relation to a surge in Covid in India. “The market basically sees through that and expects the infection rate to drop, which is what actually happened.”

Asia’s best and worst performers

Vietnam was the top performing market in the Asia-Pacific region in May – the UN index rose 7.15% for the month.

The gains came despite the fact that the Covid situation in Vietnam has worsened in recent weeks. State media reported that social distancing measures were imposed as of Monday this week in the country’s economic hub, Ho Chi Minh City.

Elsewhere, stocks in Taiwan took a hit in May as rising cases of domestic infection led to tighter restrictions.

Taiwan Taiex was the worst performing market in Asia Pacific in May, falling 2.84% for the month.

Taiwan was once internationally celebrated for its first pandemic response, which allowed life in Taiwan to be largely undisturbed compared to other countries. However, a recent surge in infections has led to measures such as the compulsory wearing of masks and restrictions on indoor and outdoor gatherings.

Total infections in Vietnam and Taiwan remain comparatively low worldwide. Vietnam has reported more than 7,300 cases, according to Hopkins data, while Taiwan has recorded at least 8,511 infections.