Asian Stock Market in 2024: The Opportunity No One Sees Coming

If Benjamin Graham were to lift his head today, he would see exactly what he predicted: when a market falls 40%, 50%, or more from its highs, true opportunities arise. And that is precisely what is happening with Asian financial markets right now.

The Current Drama: When Numbers Hurt

The numbers are compelling. Since late 2021, the main Asian stock exchanges (Shanghai, Hong Kong, and Shenzhen) have evaporated approximately $6 trillion in market capitalization. We’re not talking about minor corrections. We’re talking about brutal declines:

• China A50: -44.01%
• Hang Seng: -47.13%
• Shenzhen 100: -51.56%

What caused this collapse? A perfect storm:

The Zero-Covid policy that turned out to be an economic disaster. Tech sanctions and increased regulation on tech giants. The real estate sector in ruins (remember it is the engine of the Chinese economy). The global slowdown that reduced external demand. The trade war with the United States, especially in high-end semiconductors.

Result: China has stopped growing at double-digit rates, and structural problems are becoming more visible.

What Is China Doing About It?

Here’s the interesting part. Chinese authorities have finally moved. The PBOC announced a 50 basis point reduction in the Reserve Requirement Ratio, freeing approximately 1 trillion yuan (about $139.45 billion) to inject liquidity.

But the most important measure is still under discussion: a rescue package for the stock market close to 2 trillion yuan ($278.90 billion) that would buy shares directly to stop the bleeding in the market.

Additionally, the central bank has kept interest rates at a 3.45% low since late 2021. Everything points to Beijing being willing to do whatever it takes to revive Asian financial markets.

The True Size of the Asian Stock Market

Let’s talk big numbers. The market capitalization in the Asian region is impressive:

• Shanghai Stock Exchange: $7.357 trillion (the largest in Asia)
• Tokyo (Japan): $5.586 trillion
• Shenzhen: $4.934 trillion
• Hong Kong: $4.567 trillion

The three Chinese stock exchanges together total around $16.9 trillion. For context, China as a whole hosts over 6,800 companies. India, with its Bombay Stock Exchange, provides access to more than 5,500 companies.

This is not a neighborhood market. We are talking about Asian financial ecosystems with global weight.

The Competitors: Japan, India, and Emerging Markets

Japan was Asia’s glory in the 80s (it accounted for 40% of global stock market capitalization in 1989). Today, it ranks second regionally after Shanghai, but its growth has stagnated.

India is different. The fifth-largest economy is growing, attracting foreign investment that previously went to China. Indonesia, Vietnam, Thailand, and the Philippines are also on investors’ radar seeking alternatives.

But here’s the key: Asian financial markets are still led by China, and what happens there will determine the rest.

Operating Hours: It’s Not Magic, It’s Geography

If you live in Madrid and want to trade these markets in real time, you need to be awake between 1:00 a.m. and 9:00 a.m. Shanghai, Shenzhen, and Hong Kong are in GMT+8, while Tokyo is GMT+9.

The important part is the “Asian overlap”: between 2:30 a.m. and 8:00 a.m. (Madrid time), the four main markets are open simultaneously. This is the golden hours for trading because volume and liquidity are at their peak.

Technical Analysis: Where Is the Asian Market Heading?

China A50: Waiting for the Break

The China A50 index has been in a downtrend since February 2021 (all-time high of 20,603.10 USD). It currently trades at 11,160.60 USD, 9.6% below its 50-week moving average (12,232.90 USD).

The RSI is in a bearish consolidation zone, below its mid-level (50). For the trend to reverse, we need: a clear and sustained break of the moving average, a change in RSI slope toward overbought territory, and volume confirmation of a buy.

Key supports to watch: 10,169.20 USD (2018 lows), 8,343.90 USD (2015 lows).

Hang Seng: In No Man’s Land

The Hang Seng (tracking 80+ Hong Kong companies) behaves similarly to the A50. It is currently at 16,077.25 HK$, below both the trendline and the 50-week moving average.

The million-dollar question: does it hold this level or fall toward 10,676.29 HK$? The RSI remains in a bearish mode. Resistance levels are at 18,278.80 HK$ and 24,988.57 HK$ (the latter very distant, awaiting real changes in the Chinese economy).

Shenzhen 100: The Most Punished

With a decline of 51.56%, this index is on the verge of oversold. RSI is practically at the lower limit (30). It trades at 3,838.76 yuan, 16.8% below its 50-week average.

Next critical levels: 4,534.22 yuan (2010 highs) and 2,902.32 yuan (2018 lows). If stimulus measures work, this one could rebound the most.

The Global Context: Who Rules the Financial World?

The United States continues to dominate with 58.4% of all global capital (data 2022). The hegemony is a product of its 20th-century growth and strong institutions.

The most important Asian financial markets (Japan, China, Australia) account for just 12.2% of global capitalization. The difference is huge, but remember Japan was nearly parity just 35 years ago.

The dollar maintains its status as the world’s reserve currency, but that doesn’t mean Asian markets won’t recover.

Is Investing in the Asian Stock Market Worth It?

It depends on how you do it. The largest Chinese corporations rival Amazon and Walmart in size:

• State Grid (utilities): $530 billion in annual revenue
• China National Petroleum: direct competitor to Sinopec
• JD.com (e-commerce): $156 billion, rivaling Alibaba
• BYD (vehicles): leader in automobile manufacturing

The problem: many of these companies have restrictions for retail foreign investors, especially the state-owned ones.

Real Options

ADR stocks: You can buy shares of Alibaba, JD.com, Tencent, Pinduoduo, and BYD through Western stock platforms using American Depositary Receipts.

Derivatives (CFD on indices): If you prefer to speculate without owning the underlying asset, you can use Contracts for Difference on China A50, Hang Seng, or Shenzhen 100 through specialized Asian market platforms.

Challenges We Cannot Ignore

The region faces real obstacles that could limit future growth:

Geopolitics: Tensions in the Korean Peninsula, South China Sea, Taiwan Strait. Any escalation could turn into trade or military conflict.

Demographics: China is aging, birth rates are low, and the workforce is shrinking. This directly impacts growth potential.

Climate Change: The region is vulnerable to extreme events, and investments in renewables are mandatory, not optional.

Role of the State: Unlike the West, the Chinese state controls much of the economy. This could limit future private growth.

The Important Question: What Now?

China’s economy grew 5.2% in Q4 2023, below expectations but far from collapse. Stimulus measures are already underway. Asian markets are devastated, but that is exactly what Graham suggested is the best time to act.

The key is to monitor three things:

1. Monetary stimulus policies: Is the PBOC still lowering rates?
2. Fiscal policies: Is the 2 trillion yuan package actually being implemented?
3. Regulatory changes: Are authorities easing control over tech and real estate?

If any of these three change favorably, Asian financial markets could surprise to the upside. After years of punishment, the Asian stock market is ready for a significant recovery. What’s missing is confirmation that Beijing is serious about stimulus.

Now is the time to decide: do you wait for prices to rise 50% before entering, or do you take advantage of the fact that nobody still believes in the recovery?