Asia’s securities markets and stock exchanges date back over 150 years. In the past, population booms, global trade, and post-WWII industrial expansion were the main economic drivers of the surge in the Asian markets. In recent times, the technological boom is the primary driver of fast-growing Asian economies, like Vietnam, Japan, Indonesia, and Singapore.
The Asian stock market consists of 49 different stock exchanges, corresponding to the 49 different Asian countries. That is a lot of trading opportunities!
Hong Kong’s and Singapore’s stock exchanges are mainstays of any good brokerage. The three largest Asian stock exchanges are the Shanghai Stock Exchange, the Tokyo Stock Exchange, and the Hong Kong Stock Exchange. Together, they have a trading volume of almost $8 trillion in 2015. You will realize how massive this market is when you consider all 49 different Asian exchanges and the thousands of listed securities.
Simply put, as a foreign investor, if you are not trading Asian stocks you are leaving money on the table.
I have put together a comprehensive list of 5 reasons why you should be trading Asian stocks.
1. Asian Economies are Booming
Collectively, Asian economies have enjoyed steady growth for many years. Even now, the economies are still booming. The respective economy complements the other, and thus, the continent remains formidable. Asia has a reputable record for being one of the longest economic booms experienced by a region.
According to U.S. News and World Reports, five Asian countries made it to the top 19 Best Countries to Invest In. Also recently Forbes listed four Asian countries as Vietnam, Cambodia, Myanmar, Thailand as part of the top 10 Best-Emerging Markets of 2020.
About seven Asian countries have experienced more than five decades of annual GDP growth above 3.5%. Also, eleven Asian countries have enjoyed two decades of annual GDP growth higher than 5%. A few Asian economies, like China, have experienced years of more than 6% GDP growth! This is larger than even the U.S. GDP growth rate which fluctuates between 0.5% and 3.8% annually since it was hit by the 2008 financial crisis.
2. Asian Stock Markets are Recovering
Although the Asian economies are experiencing a boom, about two-thirds of the Asian stock market has been down. The Shanghai exchange, for example, was over 20% down in 2018. But currently, these affected markets have been showing economic signs of recovery. This might be a huge opportunity for you.
You must look at market sentiments to fully understand what kinds of plays are available. You can make profits by trading penny stocks, irrespective of what the overall market is doing.
When an economy is experiencing a boom, but the stock market suffers, there will most likely be undervalued stocks to buy. This is the buy-low, sell-high strategy that made Warren Buffet a billionaire.
Guillaume Rondan from Movetoasia.com also advise and guide investors to have a look in the Vietnamese stock market investments.
It is also important to remember that there are penny stocks in other Asian countries. You can trade penny stocks in any of the 49 Asian stock markets.
3. Lower Fees and Better Results
Generally, brokers charger high commissions when asked to make international trades. To curb this, you should open a brokerage account in Asia. Don’t use your European or American account to trade Asian stocks. You should capitalize on the growing Asian stock market, and use trade stocks at cheaper rates. It becomes as simple as trading stocks in most other places.
4. Less Competition, More Return
This is true for trading stocks of smaller Asian countries like Malaysia and Vietnam. This is another reason why you should open an Asian brokerage account. Else, you’ll be depriving yourself of the many benefits that accompany investing in emerging economies.
Small regional markets like these hardly trend with the rest of the world. And thus, these countries have numerous hidden gems with almost no professional analyst coverage. Hence, there is very little competition from heavyweight corporations.
To maximize this strategy, don’t just trade stocks in markets where every entity is buying up assets. Do some research on emerging markets and focus your investments on these treasure chests.
Please note that, although the online brokerage account you already have lets you trade in Japan or China, it will not allow you to buy stocks in Malaysia or Vietnam. You will need to open a local account for that.
5. An Opportunity to Diversify
Investing in Asian markets is a sure way to diversify your investment portfolio. As an investor, you should never put all your eggs (investments) in one basket (security or market). This is what diversification entails. It is a measure you should take to reduce the risk of losing it all, in case of market uncertainties.
Instead of investing solely in real estate, for example, you should pay some attention to other markets. The Asian stock market is a good place to start. Take your time, study the markets, and pick out only the best option for yourself.
The Asian stock markets present a fresh layer of risk. In the world of Stock Exchange, this means a fresh layer of investment returns.
The Asian stock market is very promising. The booming economies and recovering markets are good reasons why foreign investors, like you, should trade Asian stocks. You either win or lose; your result is very much dependent on how much effort you put it.
Different countries have different stock market rules. So even if you are very familiar with the New York Stock Exchange, you may be a novice in the Asian market. Research. Hire a broker. Network with other traders. Trade, but do not overdo it by trading different markets at different times.
Pick a market to trade, stick by it till you master it.