Asian Stock Market 2024: Investment Opportunities After Price Corrections

The sustained decline of Asian financial markets has created a paradoxical scenario for attentive investors. Contrary to what many might think, depressed prices do not always indicate higher risk, but quite the opposite. When assets are traded at reduced valuations, the potential for revaluation increases significantly, especially in regions with solid economic fundamentals.

The main Asian stock indices present a challenging but opportunity-rich outlook. The China A50 index has fallen 44.01% since 2021, the Hang Seng 47.13%, and Shenzhen 100 by 51.56%. These losses accumulated due to multiple factors: restrictive Covid-Zero policies, increased regulatory oversight on tech companies, real estate crisis, slowdown in global demand, and trade tensions.

Current outlook of the Asian stock market: Why does it matter?

The Asian stock market represents the world’s most dynamic economic region. In 2023, Shanghai led with $7.357 trillion in market capitalization, followed by Tokyo (5.586 trillion), Shenzhen (4.934 trillion), and Hong Kong (4.567 trillion). The combined market capitalization of Asian financial markets in China reached $16.9 trillion.

However, the dominance of North America persists. The United States accounted for 58.4% of the global market in 2022, while Japan, China, and Australia together only made up 12.2%. This data becomes relevant when considering that Japan held 40% in 1989, demonstrating that market leadership can change radically over decades.

China’s economy grew 5.2% in Q4 2023, well below its historical double-digit rates. Foreign direct investment is shifting toward alternative destinations like India, Indonesia, and Vietnam, while the population ages and birth rates decline—dynamics that will increasingly pressure the labor market.

Stimulus measures: What you need to know

Recognizing the urgency, the PBOC (People’s Bank of China) implemented reserve requirement ratio cuts of 50 basis points, releasing 1 trillion yuan (139.45 billion dollars) into the economy. The 1-year lending rate remained at a record low of 3.45%.

Even more significant is the proposal for a stabilization fund of 2 trillion yuan (278.90 billion dollars) financed from offshore accounts of state-owned enterprises, aimed at stock purchases to counteract the massive sell-offs that have characterized recent quarters.

These measures indicate that authorities recognize the severity of the situation, although their delayed response has limited immediate effectiveness. China faces deflationary pressures, which further reduce domestic consumption—a cycle that can only be reversed through coordinated and sustained stimulus.

Technical analysis: What do the charts say about the Asian stock market

China A50: After reaching historic highs of 20,603.10 $ in February 2021, this index declined to 11,160.60 $. The 50-week exponential moving average is at 12,232.90 $, representing a 9.6% gap. The Relative Strength Index fluctuates below its mid-zone (50), indicating bearish consolidation. Critical support levels are at 8,343.90 $ (2015 lows) and 10,169.20 $ (2018 lows). A sustained bullish breakout of the trend is needed to change the scenario.

Hang Seng: Trades at 16,077.25 HK$, below the downward trendline and the 50-week moving average. This index tracks over 80 companies representing 65% of Hong Kong’s total market capitalization. The next relevant support level is around 10,676.29 HK$, while significant resistance levels are at 18,278.80 HK$ and 24,988.57 HK$. The RSI also shows bearish consolidation.

Shenzhen 100: Since its all-time high of 8,234.00 yuan in February 2021, it has fallen to 3,838.76 yuan, 16.8% below the 50-week average. The RSI approaches the oversold zone (30). Major support and resistance levels are at 2,902.32 yuan (2018) and 4,534.22 yuan (2010).

Opportunities in the Asian stock market: Where to invest?

Major Chinese corporations compete directly with Western giants. State Grid recorded revenues of $530 billion in 2022, while JD.com (156 billion), Alibaba, and Tencent offer more accessible alternatives via American Depositary Receipts (ADRs) on Western exchanges.

Retail investors face restrictions on direct access to traditional Chinese state-owned companies. However, trading platforms allow speculation through Contracts for Difference, instruments that enable exposure without owning underlying assets.

Operating hours: How to make the most of the Asian stock market

For those trading from Europe (time zone GMT+1), Shanghai, Shenzhen, and Hong Kong operate on GMT+8 (7 hours difference), while Tokyo uses GMT+9 (8 hours). Viable trading hours are between 1:00 a.m. and 9:00 a.m.

The “Asian overlap”—when all four markets are open simultaneously between 2:30 a.m. and 8:00 a.m.—offers maximum liquidity and volume. This period is crucial for traders seeking to capitalize on coordinated movements of assets and their derivatives.

Structural challenges facing Asian financial markets

Geopolitical instability: Korean Peninsula, South China Sea, Taiwan Strait, and India-China border are hotspots of tension. The role of the United States as a regional security partner adds complexity.

Economic slowdown: Modest growth is expected in China, with secondary effects on economies dependent on trade and investment with it. The post-COVID recovery remains incomplete.

Accelerated demographic transition: Aging population, urbanization, migration, and changing youth roles create pressures on social security, environment, labor supply, and skills.

Climate change: The region is vulnerable to extreme events, biodiversity loss, and food insecurity, while contributing approximately 50% of global greenhouse gas emissions.

Conclusion: The key to operating the Asian stock market in 2024

The true catalyst for trend reversal lies in coordinated stimulus policies—monetary, fiscal, and regulatory. Investors should continuously monitor Chinese authorities’ announcements and economic indicator developments.

The Asian stock market offers tangible opportunities but requires strategic patience. Those who understand long-term economic cycles and remain disciplined amid volatility will be better positioned to capitalize on the recovery potential awaiting in these Asian financial markets.