Why investors should not overlook the Asian stock market

When it comes to expanding your portfolio, most investors tend to look toward Western markets. But the reality is that Asian stock markets are emerging as a new investment hub with positive signals. With over 58% of the world’s population (including China and India combined) and rapidly increasing consumer power, companies in this region have excellent growth potential.

Currently, Asian stock markets still represent a smaller share than they should in the global stock index (MSCI ACWI), despite Asia accounting for 30% of the world’s GDP. This is a sign that long-term growth opportunities remain immense. Compared to other regions, quality companies in Asia (excluding Japan) show higher ROIC and better growth prospects.

Why Asian stock markets are a good choice

Conversion opportunities into profits: Asian markets feature many attractive stock prices and are filled with high-growth potential companies, including tech firms, steel producers, and financial institutions across various countries.

Market diversification: Instead of focusing on a single country, you can spread your investments across multiple markets and industries simultaneously—from Japan to Indonesia—each offering its unique propositions.

Resilience against risks: Asian stock markets demonstrate resilience amid international volatility, helping you reduce overall portfolio risk.

Overview of leading global stock exchanges

When it comes to market capitalization (Market Capitalization), the largest markets in the world are:

It’s clear that Asian stock markets constitute a relatively small portion compared to American markets, but this highlights the growth potential still present.

Main and secondary markets in Asia

Primary stock exchanges

Japan: Tokyo Stock Exchange (TSE) is the central trading hub.

Hong Kong: Hong Kong Stock Exchange (HKEX) serves as an international financial center.

China: Shanghai Stock Exchange (SSE) and Shenzhen Stock Exchange (SZSE) both show positive signals.

South Korea: Korea Exchange (KRX) demonstrates strong presence.

Secondary and specialized markets

India: Bombay Stock Exchange (BSE) and National Stock Exchange (NSE), along with Calcutta Stock Exchange (CSE) and Madras Stock Exchange (MSE).

Taiwan: Taiwan Stock Exchange (TWSE), Taipei Exchange (TPEx), and GreTai Securities Market (GTSM).

Malaysia: Bursa Malaysia (KLSE) with ACE Market.

There are also markets in Indonesia (IDX), Singapore (SGX), Philippines (PSE), and Thailand (SET).

Key Asian stock indices to watch

HK50 - Hang Seng Index

The Hang Seng Index (HSI) is a key indicator of Hong Kong’s stock market status. It is calculated from the top-performing stocks on the Hong Kong Stock Exchange, reflecting the economic situation of one of the most important cities in the region.

This index is important because it serves as a tool for global investors to monitor Asian market prospects. The HK50 price can change rapidly based on economic and political news.

JPN225 - Nikkei Index

The Nikkei Stock Average (Nikkei 225) includes 225 of Japan’s most prominent companies and acts as a barometer of Japan’s economic health.

Covering a wide range of industries—from automobiles to technology—investors use the JPN225 to gauge the strength of Japan’s economic fundamentals and investment opportunities.

Asian stock market trading hours: essential times to know

Stock markets are not open 24/7 like forex. Here are the trading hours you should remember:

The highest trading volumes usually occur at market open, which is also when the charts tend to be most volatile.

Optimal trading times for Asian stock markets

There is no one-size-fits-all answer, but here are some considerations:

For long-term investors: If you’re accumulating assets for retirement or to increase value over the next ten years, short-term trading volume and market volatility are less of a concern. You can invest systematically and stay on your planned path.

For short-term traders: If you’re trading to profit from price movements, precise analysis and monitoring economic news are essential. Short-term trading carries higher risks.

Consider personal circumstances: Your budget, investment horizon, and risk tolerance all play roles.

Use fundamental analysis: Trading should be based on rational market analysis, not emotions.

Two approaches to analyzing Asian stock markets

Technical analysis

This method uses price and volume data to predict future directions:

Chart observation: Study candlestick charts to understand trends and patterns.

Support and resistance levels: Identify price levels where historically prices tend to pause or reverse.

Example: If HS50 remains below the 60-day MA and forms lower highs, it signals a downtrend (downtrend). Traders might wait for a reversal or look for stronger support levels.

Fundamental analysis

This approach considers macroeconomic factors:

Interest rates: Changes in monetary policy impact stock prices.

GDP figures: If Japan’s GDP drops from 6% to 4.8%, it warrants slightly reduced confidence.

Inflation rate: When inflation peaks at 3.7% (the highest in 41 years in Japan), it indicates economic pressure.

Political news: International conflicts or new policies can shift markets.

How to start trading Asian stock markets

Once you open a live trading account or a demo account, you can access the trading platform and begin:

1. Navigate to the Market section to view real-time price charts.

2. Select Indices to see only index products.

3. Find Asian stock markets you’re interested in (HK50, JPN225, or others).

4. Analyze and enter positions.

Why Asian stock markets are worth following right now

While Western companies face high inflation and trade conflicts, China is easing COVID restrictions and implementing growth-supportive policies. This signals that Asia is recovering. Moreover, media reports are abundant, making it easier to stay updated on developments in real time.

Summary

Asian stock markets are not as protected as Western markets but are rich in opportunities. With large populations, rapid company growth, and still undervalued valuations, they present significant potential.

For serious investors aiming to build wealth, expanding into Asia through indices like HK50 and JPN225 can be a smart move. Invest carefully, analyze thoroughly, and harvest profits in the coming years.