Investment prospects in Asian financial markets 2024: A practical guide

The Pulse of Asian Financial Markets: Where to Start?

The Asia-Pacific region concentrates some of the most promising opportunities in the global investment landscape. With transforming economies, exploitable volatilities, and stimulus policies underway, the Asian financial markets deserve the attention of any modern investor. The key question is not whether to invest, but how to do so intelligently.

Contrary to what many think, depressed prices in these markets do not always represent risk, but opportunity. When values fall significantly from all-time highs, assets become more accessible. This is precisely the scenario we face today in Asia, particularly in China, where Asian financial markets are undergoing a profound restructuring.

Anatomy of the Asian Crisis: China at the Epicenter

Asian financial markets, especially Chinese ones, have experienced a severe correction since 2021. The three main stock exchanges in the country—Shanghai, Hong Kong, and Shenzhen—have lost approximately 6 trillion dollars in market capitalization. The numbers do not lie: the China A50 index fell 44.01%, the Hang Seng 47.13%, and the Shenzhen 100 experienced the most dramatic drop with 51.56%.

What triggered this avalanche in Asian financial markets? A deadly combination of factors:

• Economic policy mismatches: Mistakes in pandemic management weakened domestic consumption and generated a persistent deflationary process.
• Regulatory pressures: Authorities intensified scrutiny over tech giants, limiting their expansion.
• Real estate crisis: The sector underpinning Chinese growth entered a negative spiral.
• Fragmentation of global trade: Trade tensions with the United States, particularly over semiconductors, cut vital supply lines.
• Global slowdown: Weak global economy reduced demand for Asian exports.

The result is that the Chinese economy grew just 5.2% in the fourth quarter of 2023, far from its historic double digits. Manufacturing is shifting toward India, Indonesia, and Vietnam, while foreign direct investment declines. The population is aging, birth rates are plunging, and the labor market faces structural pressures.

Policy Responses: Will They Be Enough?

Authorities have finally acted. The Chinese central bank cut the Reserve Requirement Ratio by 50 basis points, releasing 1 trillion yuan (approximately 139.45 trillion dollars) into the economy. Even more ambitious is the 2 trillion yuan (278.90 trillion dollars) stock market rescue package under discussion, which would use funds from state-owned companies to stabilize the markets by buying shares.

Simultaneously, the 1-year lending prime rate remained at historic lows of 3.45%, signaling a pro-liquidity approach. However, there is a legitimate concern: are these measures coming too late? Are they coordinated within a coherent strategy?

Asian financial markets watch each announcement closely. For now, these initiatives represent liquidity stimulus, but the real test will be whether they succeed in reactivating domestic consumption and halting the massive liquidation of securities.

Map of Asian Financial Markets: Geography of Opportunities

Asia is the largest and most populous continent, and its economy concentrates the dynamism of the 21st century. The most significant Asian financial markets reflect this diversity:

China leads with three main exchanges. The Shanghai Stock Exchange is the largest in the region with 7.357 trillion dollars in capitalization. Hong Kong Exchanges and Clearing Market totals 4.567 trillion, and Shenzhen Stock Exchange adds 4.934 trillion. Together, these markets host over 6,800 companies, consolidating a total capitalization of 16.9 trillion dollars. However, limited access exists for foreign investors in certain segments.

Japan remains relevant. Its Tokyo Stock Exchange has 5.586 trillion dollars in capitalization, although its historic leadership was surpassed by Shanghai due to Japan’s prolonged economic stagnation.

India, the fifth-largest economy worldwide, offers access through the Bombay Stock Exchange with over 5,500 listed companies. It is an emerging hub with more robust growth than China.

Intermediate developed economies such as South Korea, Taiwan, Singapore, Australia, and New Zealand complement the ecosystem.

Dynamic emerging markets like Indonesia, Vietnam, Thailand, the Philippines, and Malaysia represent the next frontier of expansion in Asian financial markets.

Global Context: U.S. Hegemony Persists

Although Asian financial markets are growing, U.S. dominance remains overwhelming. The United States accounted for 58.4% of the global capital market in 2022. Japan, China, and Australia combined accounted for just 12.2%. However, this gap is instructive: Japan held 40% in 1989 before its decline. Trajectories change.

The excessive role of the state in China’s economy could become the key limiting factor for its Asian financial markets to surpass Western hegemony in the long term. Concentration of power reduces entrepreneurial creativity and limits opportunities for organic growth.

Operational Calendars: Synchronization to Maximize Returns

If you will operate from Europe—say Madrid—you must consider three critical variables when accessing Asian financial markets:

Time differences: Tokyo operates on GMT+9 (8 hours ahead of Madrid), while Shanghai, Shenzhen, and Hong Kong operate on GMT+8 (7 hours ahead). To trade in real-time from Madrid, activate between 1:00 a.m. and 9:00 a.m.

Instrument type: Stocks require trading during session hours. Derivatives (futures, CFDs) allow trading almost 24/5 with a nighttime recess.

Overlap of hours: Between 2:30 a.m. and 8:00 a.m. (Madrid time), the four main markets operate simultaneously. This “Asian overlap” offers optimal volume and liquidity to take advantage of movements in Asian financial markets.

Technical Analysis of Main Indices

China A50: Waiting for the Breakout

This index tracks the 50 largest A-shares in Shanghai and Shenzhen. Since February 2021, it has been in a downtrend from highs of 20,603.10$. Currently trading at 11,160.60$, 9.6% below its 50-week moving average (12,232.90$).

The Relative Strength Index fluctuates below its mid-zone (50), indicating bearish consolidation. To shift bullish sentiment, the price must sustainably break the trendline and the moving average, accompanied by an RSI rising toward overbought territory.

Key levels to watch: support at 8,343.90$ (August 2015 lows), resistance at 15,435.50$ (May 2015 highs), and an intermediate level at 12,288.00$.

Hang Seng: Mirror Behavior

The Hang Seng tracks leading companies in Hong Kong, covering 65% of market capitalization with over 80 companies. It mirrors the pattern of China A50: trading below the downtrend line and its 50-week moving average. The RSI also remains in bearish consolidation.

Current price: 16,077.25 HK$. Next relevant downside level: 10,676.29 HK$. Resistances at 18,278.80 HK$ and 24,988.57 HK$, the latter distant but representing structural transformation in the Chinese economy.

Shenzhen 100: The Most Pressurized

This index of the top 100 Shenzhen A-shares has fallen from all-time highs of 8,234.00 yuan in February 2021. Currently at 3,838.76 yuan, with RSI near oversold (30).

Main supports: 2,902.32 yuan (December 2018 lows) and resistance at 4,534.22 yuan (November 2010 highs).

The technical conclusion is clear: Asian financial markets remain under pressure, but oversold conditions create potential reversal scenarios if stimulus policies generate economic confirmation.

Structural Challenges Shaping the Future

Four critical challenges threaten Asian financial markets:

Geopolitical instability: The Korean Peninsula, South China Sea, Taiwan Strait, and India-China tensions are hot spots. Any escalation would impact regional trade and cooperation. The U.S. role as a security ally adds layers of complexity.

Sustained slowdown: China will face more modest growth. Its trading partners will suffer side effects. Post-COVID recovery remains incomplete across the region.

Accelerated demographic transition: Population aging, mass urbanization, internal migration, and generational shifts pressure social security costs, strain the labor market, and widen skills gaps.

Climate impact: The region is vulnerable to extreme events, biodiversity loss, and food insecurity. Simultaneously, it accounts for 50% of global emissions. Balancing development with sustainability is imperative.

Investment Strategies in Asian Financial Markets

Direct Access to Stocks

Major Chinese corporations rival Western giants in scale. Walmart and Amazon led Western (611 and 514 billion dollars in revenue in 2022), but State Grid of China reached 530 billion dollars.

However, restrictions on retail foreign investors limit direct access to Chinese state-owned enterprises. More open alternatives include:

• JD.com (e-commerce, 156 billion dollars in revenue): direct competitor to Alibaba, accessible via ADRs.
• Tencent: tech and entertainment giant.
• BYD: electric vehicle manufacturer expanding globally.
• Pinduoduo, Vipshop: dynamic e-commerce platforms.

These stocks are traded on Western exchanges, simplifying access.

Via Derivatives: Flexibility Without Ownership

Contracts for Difference (CFDs) allow speculation on Asian financial markets without acquiring underlying assets. Specialized platforms facilitate this access, offering leverage, multi-index trading, and superior time flexibility.

This route suits active traders seeking to leverage volatility without long-term corporate ownership commitments.

The Decisive Moment: What to Watch

The key to investing in Asian financial markets in 2024 lies in monitoring announcements on monetary, fiscal, and regulatory stimulus. Current measures have been anticipated for months, but their effectiveness will determine whether declines are genuine opportunities or precursors to new corrections.

Indicators to watch:

• Confirmation that Chinese growth accelerates toward 6%+
• Reversal of the deflationary process
• Stabilization of the real estate market
• Recovery of foreign direct investment

Meanwhile, Asian financial markets remain at a turning point: valuations are attractive, but economic confirmation is still pending. Patient investors who understand geopolitical patience and economic cycles will find in these Asian financial markets a canvas of opportunities for the coming years.