For Investors: The Good & Bad of Asian Markets

What’s going on in Asia’s markets? Apparently, they’re following the lead of Western nations’ securities indices and losing significant value. There’s a lot more going on in Japan, China, Korea, and other central trading zones in the hemisphere, but that’s the overall view. However, for anyone intent on getting involved in the region’s economy as an investor or trader, it’s essential to gather all the facts.

Are you interested in taking advantage of the unique opportunities in Asia in 2022? If so, be certain to find out about the potential pitfalls as well. What’s the most comprehensive way to acquire the core facts and make informed decisions? It’s a three-step process that begins with making a tally sheet of pertinent Asia market facts.

Next, develop a shortlist of hazards that investors might encounter. Finally, create a preference list of the one or two opportunities that suit your investing style, budget constraints, and risk tolerance. Use the details below to get started with each step.

New and experienced traders interested in using CFDs (contracts for difference) or following cryptocurrencies and forex usually operate from a major online brokerage site in order to maintain the ability to buy and sell in all international markets in a variety of ways.

Overview of Asia’s Current Markets

All the major Asian indices were off recently, partly in reaction to US and European declines the previous week but also from a range of local factors that had varying levels of severity. Japan is a case in point as the nation’s domestic economy is starting to show signs of rising inflation alongside weak GDP growth. By definition, the condition is stagflation, but the question is whether Asia’s downturn will mimic those in Western nations. What’s the relevant trading news from Japan, Korea, and nearby economies?

The last half of May was brutal, as inflation finally began to take hold in otherwise healthy financial conditions. Major corporations in the region posted negative earnings reports, and domestic inflation indicators revved up. The Nikkei index, lost a full three percent of its total value before bouncing a bit just before the May 20 closing bell. News out of South Korea was equally bad, with that nation’s index, the KOSPI, losing more than one percent of its value. The story repeated itself all over Asia as nation after nation endured a truly awful week that began on May 16.

How did all the down sliding begin? Apparently, Japan and Korea were simply following suit after Wall Street posted one of its worst days in history on May 18. It’s possible to point to a string of corporate earnings troubles as the source of all the Asian financial problems. In the majority of those cases, the companies that reported negative news were some of the world’s largest retailers. Those giant retail corporations are hurting as a result of inflation induced price hikes.

Possible Risks for Participants

• Taiwan: Risks in Asia-based economies are often obvious but sometimes can be quite complex and subtle. The ongoing political tension between Communist China and Taiwan could ignite a regional military conflict at any moment. Based on recent statements by mainland officials and members of the Communist Party, Taiwan’s leaders have taken defensive military positions to stave off a possible act of unwarranted aggression.
• Japan: Once the shining star of the world economy, Japan has fallen on hard times. Amid a national depopulation crisis in which older retirees are not being replaced by young workers at a fast enough rate, domestic production is expected to suffer over the next decade. Additionally, the formerly hot economy is experiencing US-like stagflation amid tepid corporate growth and rising consumer prices.
• China: The world’s largest dictatorship and centrally controlled economy, China is facing a reckoning that goes to the very core of its political system. Besides the inherent flaws of collectivism, the heavy-handed rule by the one-party government has outlawed private ownership of cryptocurrency and a long list of financial transactions. Investing in China has never been riskier, especially as COVID continues to wreak havoc throughout the country. The government has worked hard to prop up its currency, the yuan, to no avail. In fact, the currency recently posted its weakest month in history. Likewise, the nation’s commodities have suffered their worst fate in years.

Potential Opportunities

In Southeast Asia, Indonesia is the current success story of the region. Now coming out of the COVID-induced lag, its banking and manufacturing sectors are largely isolated from the effects of European wars and US-based inflationary pressures. Along with India and Vietnam, Indonesia represents a bright spot in an otherwise downtrodden Asian economic environment.