Amongst the top 10 stock exchanges of the world, there are three Asians. The Asian stocks include Tokyo (TSE), Shanghai and Hong Kong stock exchanges. The stock industry in Asia has been showing good signs in the past six months leading up to one year. On one side of the coin, an unprecedented flop in global crude oil prices of more than 50% has worked as a shot of adrenalin for the global economy, and on the other, an increasing consumer confidence including some global investor confidence that is bolstering the rate of global economic growth.
China: Over the past six months, the Shanghai Stock Exchange has outperformed most of the performance estimates by a great margin. The total increase in the cumulative value of shares traded on the Chinese exchange has spiked by a considerable 91%. The increase can be attributed primarily to favorable changes in investor confidence, speculations and excessive. The Chinese securities along with qualified exchange authorities have tried to cool the booming stock market but have been unable to do so. Presently, the authorities are expected to intervene stronger, thus, resulting in a meaningful impact.
On April 21, the amount of daily trading on the Shanghai exchange assumed alarming proportions after increasing to $161 billion. The amount of trading activity is unprecedented. Another factor that has attracted a large number of investors to the stock market is the flattening of the housing market. It has obliged investors to try their luck in the booming stock market. Most of the investors are either individuals or retail investors; professionals and institutions have kept themselves aloof from the market. Most investors are injecting capital into the market out of borrowed funds. April 10 data showed investors borrowed 1.6 trillion yuan to finance investments in the stock market. The situation is alarming and calls for practice caution to come into play. In the future, the volatility of the Shanghai Stock Exchange will increase, thus, making it prone to sudden highs and lows.
Japan: The Tokyo Stock Exchange, too, has been soaring high since the past months. Wednesday saw the market enter its eight years’ zenith. Lately, Nikkei 250 crossed the 20,000-point psychological barrier to assume its 15 years’ highest point. Nikkei has increased by 33% in the past month only. The Bank of Japan has been unable to achieve its target of bringing down inflation to 2%. Economic stability in the country is expected not to impede the growth of Nikkei. Japan’s prominent brokerage houses such as Nomura Holdings and Daiwa Securities invariably drew buying orders only in the past couple of sessions. The uptrend is expected to persist so long as the market does not saturate and reach high volatility levels.
Korea: The Korean Stock Exchange last week increased to its 3.5 years highest point. The rate of economic growth in South Korea was 0.8% in the 2014 first quarter, which gave a welcome stimulation to the stock industry. In the quarter following, the rate of economic growth turned to 0.3%.
Hong Kong: Hong Kong stock market too has been performing great. Recently it increased to its seven years’ highest point. The impressive increase in market performance came in the midst rumors regarding a merger between the State Owned Enterprises (SOEs). China will move to decrease the SOEs to 40 through mergers. At present, there are 112 SOEs. HSBC’s favorable performance has also affected the market positively. The market is expected to grow further in the days to come.
The Asian stock markets present a great opportunity to earn high returns. Some markets are already experiencing saturation and some are still in the process of growth. There exist a host of opportunities that, if capitalized upon, can earn the investors great returns.
