2024 in Asian Markets: When Opportunities Are Born from Crisis

Recently, Warren Buffett recalled an uncomfortable truth: when everyone flees, prices fall; when everyone buys, prices rise. Never has it been more true than now in Asian markets, where investors face a historic crossroads. While Wall Street celebrates record highs, Shanghai, Hong Kong, and Shenzhen are bleeding. Is it irrational panic or a sign of real problems? The answer will determine the winners of 2024.

The Silent collapse: What is happening in Asia

For three years, Asian markets lost approximately $6 trillion in market capitalization. This is not a minor correction. The three main stock indices of China show devastating declines:

• China A50: down 44.01% from the 2021 peak
• Hang Seng: plummeted 47.13%
• Shenzhen 100: catastrophic drop of 51.56%

These figures reflect an increasingly complex economic reality. The Chinese economy, once growing in double digits, now barely reaches 5.2% annually. But behind these numbers is a perfect storm: the failure of the Zero-Covid policy, regulatory repression of tech giants, systemic real estate crisis, global slowdown, and trade tensions with the United States over cutting-edge semiconductors.

The most worrying thing is not what happened, but what’s coming: foreign direct investment is shifting toward India, Indonesia, and Vietnam. Manufacturing is leaving China. The population is aging without a demographic safety net. These are structural changes, not cyclical.

The Central Bank’s weapons: enough to stop the bleeding?

The People’s Bank of China (PBOC) finally acted, but cautiously. Its moves so far:

Measure 1: Liquidity injection - 50 basis points cut in the reserve requirement ratio, releasing approximately $139.45 billion (about 139.450 million dollars) into the real economy.

Measure 2: The “Rescue Plan” (still under discussion) - Possible stabilization fund of $278.9 billion (about 278.900 million dollars) from offshore accounts of state-owned companies. Its goal: to buy massive amounts of shares to stop panic selling.

Measure 3: Historically low interest rates - The PBOC maintains the 1-year lending rate at a minimum of 3.45%, a trend since late 2021.

The problem: measures arrive late and disconnected. While monetary stimulus tries to pump money into the system, the Chinese economy enters deflation, meaning consumers are pulling back on spending. Easy money does not resolve structural distrust. That’s why the market remains skeptical.

Geography of opportunity: the true giants of Asia

Where is the real money in Asian markets? Here is the ranking by actual market capitalization (2023):

1. Shanghai Stock Exchange: $7.357 trillion (undisputed regional leader)
2. Tokyo (Japan): $5.586 trillion (second power, but stagnant since 1989)
3. Shenzhen: $4.934 trillion
4. Hong Kong: $4.567 trillion

Together, the three Chinese exchanges reach $16.9 trillion. However, this figure is misleading: it represents market value, not opportunity. India emerges as an alternative with its Bombay Stock Exchange managing over 5,500 companies, while medium-sized economies like South Korea, Australia, Taiwan, and Singapore offer relative stability.

The surprising thing: just 35 years ago, Japan controlled 40% of all global markets. It fell to 5.7% today. That Japanese decline is the lesson that should worry investors in Asian markets.

The 4 demons lurking: real risks for 2024

1. Unprecedented geopolitical instability

The Korean Peninsula, the Taiwan Strait, the India-China border, and the South China Sea are powder kegs waiting for a spark. Any trade or military escalation would affect capital flows into Asian markets. The role of the United States as a regional security ally is crucial but also introduces uncertainty.

2. Persistent slowdown

China will continue growing, but never at the rates of the past decade. Its trading partners (especially Southeast Asia) depend on Chinese growth. However, global trade continues recovering unevenly post-pandemic.

3. Demographic bomb

Accelerated aging of the population, low birth rates, rural-urban migration, and skills mismatch are problems that Asian markets cannot solve with cheap money. This limits potential growth per decade.

4. Climate vulnerability

The region generates nearly 50% of global greenhouse gas emissions but suffers increasingly from extreme weather events. Balancing development with sustainability will be costly.

Technical: Reading market signals

China A50 Index - Waiting for the break

This index tracks 50 A-shares from Shanghai and Shenzhen. Currently trading at $11,160.60, 9.6% below its 50-week moving average (12,232.90 $). The all-time high was $20,603.10 in February 2021.

Technical reading: As long as it remains below the 50-week average and the RSI fluctuates below its mid-level (50), the downward pressure continues. Critical supports are at $10,169.20 (2018 lows) and $8,343.90 (2015 lows). Important resistance at $15,435.50. Only a sustained break above the moving average with a change in RSI slope would signal the end of the downtrend.

Hang Seng - The mirror of Hong Kong

This capitalization-weighted index covers 65% of the Hong Kong stock exchange and more than 80 companies. Currently at HK$16,077.25, also below its 50-week average. The next major barrier is at HK$10,676.29 (critical support). Relevant resistance at HK$18,278.80 and much farther at HK$24,988.57.

Shenzhen 100 - The weakest

Tracking the 100 main A-shares of Shenzhen, this index trades at 3,838.76 yuan, 16.8% below its 50-week average. RSI is practically in oversold territory (30). Major supports at 2,902.32 yuan (2018) and 4,534.22 yuan (2010).

Technical conclusion: All three indices reflect seller panic but also potential accumulation. The pattern is clear: wait for decisive breakouts with indicator confirmation.

How to participate: tools for 2024

Asian markets are not the monopoly of specialists. You have two paths:

Direct route: Chinese stocks on Western exchanges

Companies like JD.com (Alibaba rival), Tencent, BYD (electric vehicle manufacturer), Pinduoduo, and Vipshop trade via ADRs on Western exchanges. However, the largest Chinese state-owned corporations (State Grid, China National Petroleum, Sinopec) are subject to restrictions for retail foreign investors.

Indirect route: derivatives

Contracts for Difference (CFD) allow you to speculate on index movements without owning the underlying asset. Specialized platforms in Asian markets as online trading tools offer exposure 24/5 to these markets with leverage.

The verdict for investors: what to expect in 2024

Benjamin Graham was right: the best prices are born from collective panic. Asian markets are cheap for real reasons, not imaginary ones. But the price of admission is patience.

What to monitor:

1. Monetary and fiscal policy announcements - They are your compass. Every real stimulus measure adds bullish points.
2. Recovery of foreign direct investment - A sign of renewed confidence.
3. Technical movements of indices - Especially breakouts with volume confirmation.
4. Global interest rates - The lower the cost of money, the greater risk appetite in Asia.

2024 will be the year when Asian markets demonstrate whether their fundamentals are as weak as they seem or if the panic simply overreacted. The numbers are at your disposal. The decision is yours.