Investment opportunities in Asian markets: The key moment of 2024

Asian financial markets present a paradoxical scenario in 2024. While major Asian stock exchanges have experienced drastic declines since 2021, this correction has also created a window of opportunities for attentive investors evaluating valuations.

The decline of Asian markets: numbers that speak

The region has seen a significant correction. The largest Asian stock markets have lost billions in market capitalization over the past three years. Specifically, the China A50 index retreated 44.01%, the Hang Seng fell 47.13%, and the Shenzhen 100 registered a decline of 51.56%.

This bleeding is mainly concentrated in China, where approximately 6 trillion dollars in market value have evaporated. The main causes of this debacle include the implementation of restrictive policies, regulatory pressures on the tech sector, geopolitical tensions with Western powers, and a declining global demand.

Why do Asian stock markets deserve attention?

Despite the discouraging outlook, investment analysis fundamentals suggest an imminent turnaround. When prices fall significantly, relative risk decreases, creating attractive entry points. Asian financial markets, particularly Chinese ones, are trading at valuations not seen in years.

The Chinese economy, although slower than past decades, still maintains a quarterly growth of 5.2%. The region remains the economic engine of Asia-Pacific and concentrates enormous capital resources.

Monetary stimuli: the expected catalyst

Authorities have begun to take corrective measures. The Chinese central bank announced reductions in reserve requirements that would free over 1 trillion yuan into the economy. Even more importantly, rescue plans for the stock market worth nearly 2 trillion additional yuan are being discussed.

These interventions reflect governments’ determination to revive economic activity in Asian markets and halt the massive liquidation of securities.

Structure of the largest Asian stock markets

Shanghai leads the region with a capitalization of 7.357 trillion dollars, followed by Tokyo (5.586 trillion), Shenzhen (4.934 trillion), and Hong Kong (4.567 trillion). Together, Chinese Asian markets total around 16.9 trillion dollars, positioning them as the second most important financial region globally.

India, with its Bombay Stock Exchange, emerges as a growth alternative, while markets like Singapore, Thailand, and Indonesia present opportunities in emerging markets.

Operating hours and strategy for European investors

To operate from Europe, investors should consider the key overlapping trading hours between Asian markets from 2:30 to 8:00 a.m. (Madrid time). This period guarantees maximum liquidity and trading volume, allowing for execution of operations with tighter spreads.

Technical analysis: critical levels in Asian markets

China A50: The index needs to sustainably break its downtrend line at 15,435.50 dollars to confirm a change in direction. Lower support levels are at 10,169.20 and 8,343.90 dollars. The relative strength indicator remains in bearish consolidation, requiring bullish confirmation.

Hang Seng: Quoting at 16,077.25 Hong Kong dollars, with resistance at 18,278.80 and significant lows near 10,676.29. Its behavior mirrors the weakness of the mainland market.

Shenzhen 100: This index operates around 3,838.76 yuan, close to a technical oversold zone. The next relevant support is at 2,902.32 yuan (2018 lows).

Challenges facing Asian markets

The region faces four main structural challenges. First, geopolitical instability in areas like the Taiwan Strait and the South China Sea. Second, the slowdown of regional economic growth. Third, demographic transitions with aging populations and labor shortages. Fourth, climate vulnerability and increasing environmental pressures.

Options for investing in Asian markets

Investors have multiple pathways. Direct purchase of shares in companies like JD.com, Alibaba, or Tencent through ADRs in Western markets offers direct exposure. Alternatives like Pinduoduo or BYD allow investment in specific sectors.

For those preferring flexibility, derivative instruments such as contracts for difference (CFD) enable speculation without acquiring underlying assets, operable 24 hours (except recesses) through regulated platforms.

The key for 2024: monitor policy announcements

The decisive factor for Asian markets in the coming months will be the effective implementation of stimulus policies. Investors should stay alert to:

• New monetary liquidity packages
• Changes in regulations of the tech sector
• Data on domestic consumption and industrial activity
• Signals of recovery in the Chinese real estate market

Asian markets offer the typical risk-reward of correction cycle markets: depressed prices but with significant recovery potential if policies prove effective. This scenario requires constant monitoring and operational discipline.