“History is stacking up against momentum” in Asia, Bernstein analysts Rupal Agarwal and Anusha Madireddy wrote in a note. “The evidence for long-term momentum premium is weak in Asia –- the best momentum strategy has generated annualized returns of 6% in last 20 years,” they wrote.
An investment strategy that attempts to profit off existing market trends is “doomed tactically” for Asian equities, according to Sanford C. Bernstein.
So-called momentum trading, which seeks to buy rising stocks and short downward-trending ones, will likely underperform regardless of the direction of markets or volatility, the brokerage says. It recommends investors reduce exposure to high-momentum shares.
