The recent rally in Asia's equities had a solid footing, but it's time to check the optimism, HSBC said in a note Monday.
Over the past three months, the MSCI Asia-Pacific ex-Japan index has climbed 9.0 percent; it fell 10.7 percent in 2015.
"The combination of a weaker U.S. dollar, higher commodity prices, low valuations and, significantly, more proactive policymaking across Asia, especially in China and Indonesia, has led to a resurgence in interest in Asian equities," HSBC said.
The bank expects the move by multiple central banks globally to cut interest rates into negative territory -- sending yields on many government bonds negative -- is also likely to boost appetite for Asian equities.
"Investors are willing to take on more risk when facing a guaranteed loss, so risk-taking is likely to be higher in a world of negative interest rates," it said.