Asian markets have developed very rapidly in recent decades.
Asia is often thought of as the engine for future growth globally. China was 15% of the emerging stock market in 2008, now represents over a third. Wider Asia including India makes up 80%.
Energy and materials are no longer the main sectors. Now Internet, e-commerce and IT are the largest. This is mainly due to China opening up to foreign investment giving investors exposure to internet led rather than manufacturing companies.
Asia now has a wealthy middle class who consume more and require things like financial services and health products. Innovation is driven too off the back of this around AI and cloud applications.
The Chinese are trying to lessen the gap between the classes and give the poor more spending power which will benefit many companies. China may become a larger market for others to sell to. Other Asian countries are benefiting from Chinese investment and China’s middle and upper classes are forecast to expand more than the size of the US population by 2030.
China’s markets are promising in the long terme but may still see bumps in the road in the short term. They were strong in 2020 but in 2021 the tech companies were pushing too hard and China instilled heavy regulation around property also, both of which hurt the market.
Asia Opportunity
Eventually, Chinese companies will become part of global stock indices as they are now of sheer scale. The Asian region is diverse and large creating many opportunities.
India is also a huge Asian market whilst countries such as Vietnam have been quick to develop and are attracting investment with companies diversifying their manufacturing away from China. India had a strong year for tech IPOs and digital infrastructure with more to come.
There are also opportunities in more developed Asian countries such as Australia, South Korea and Taiwan though these are more to be looked at with an individual focus on certain companies with good fundamentals.
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This article is for informational purpose only. It does not constitute finacial, tax or legal advice, nor is it a recommendation to buy, sell or hold any investment. Past performance is not a guide to the future, investments rise and fall so investors could make a loss. No view is given on the present, future value or price of any investment and investors should form their own view on any proposed investment.