Top 10 Asian Stock Markets In 2017

Opportunities in Asia

Top 10 Asian Stock Markets In 2017

Asian stocks have soared in 2017. Here we reveal which markets in the region have registered the biggest gains this year.

Published on 29 December 2017

Stock markets across the Asia Pacific region have done exceedingly well in 2017. The MSCI All Country Asia Pacific Index (MCSI AC Asia Pacific) – which comprises 1,032 companies in five developed market countries and nine emerging market countries in the region – gained 29% in the first eleven months of 2017.

In fact, the MSCI AC Asia Pacific Index outperformed the MSCI All Country World Index (MSCI ACWI) by almost 7% – the latter rose only 22.6% during the January-November period.

Why have stocks in the Asia Pacific region registered such impressive gains? An uptick in global demand and resurgence in China’s economy have contributed to the strong performance.

Another key factor is Asia’s tech stocks, which have skyrocketed in 2017. For example, Tencent, a Chinese internet giant listed on the Hong Kong Exchange, has seen its share price rise by 114% this year. It currently has a market cap of US$465 billion and represents 10% of the Hong Kong’s benchmark Hang Seng Index.

Here we take a look at how the main indexes of the Asia’s ten biggest stock markets (in terms of total market cap) have fared in 2017 (as of 26 December):

#1 Hong Kong

Asian Stock Markets, China, Australia, India, Hong Kong, Singapore, Taiwan, Japan, South Korea, Malaysia, Indonesia

Hang Seng Index
Gain in 2017: 34.4%

Hong Kong’s Hang Seng Index is currently at its highest level since October 2007. With Tencent leading the charge, investor sentiment is still bullish. Hong Hao, head of research at Bocom International, an investment management firm operating out of Hong Kong and China, says, “The momentum is very strong… and I am hearing very few sceptical voices… it seems like nothing can go wrong with this rally.”

#2 India

BSE Sensex 30
Gain in 2017: 27.5%

The Indian stock market received a large boost from the demonetisation of high-value currency notes in November 2016. People were given a 45-day window to deposit their newly worthless currency notes into their bank accounts. A large portion of this money found its way into equity-linked mutual funds in 2017, and these funds saw a net inflow of about US$37 billion in the first nine months of the year. The same period in the last year had seen an outflow of US$18 billion.

#3 South Korea

Asian Stock Markets, China, Australia, India, Hong Kong, Singapore, Taiwan, Japan, South Korea, Malaysia, Indonesia

KOSPI
Gain in 2017: 20.5%

It is estimated that South Korea’s top five chaebols – LG, Hyundai, SK, Lotte, and Samsung – control over half the country’s economy and account for more than 50% of the market cap of the country’s stock exchange. Samsung Electronics, a global tech market leader, saw its share price rise by 38% this year. South Korea’s tech stocks are expected to continue rising in 2018. “We are just at the beginning of a long-term cycle,” says Avo Ora, a portfolio manager at Pictet Asset Management, a private bank and asset management firm based in Geneva.

#4 Japan

Nikkei 225
Gain in 2017: 19.7%

In recent years, Japan’s manufacturing sector has seen a revival. A study conducted in 2016 by Deloitte, a consulting firm, ranked Japan at #4 in terms of global manufacturing competitiveness. Three years earlier, the country was ranked tenth. This improvement has helped Japan’s economy grow by 2.5% on an annualised basis in the third quarter of 2017. Better corporate performance has helped the Nikkei 225 climb to its highest level in 21 years.

#5 Indonesia

Asian Stock Markets, China, Australia, India, Hong Kong, Singapore, Taiwan, Japan, South Korea, Malaysia, Indonesia

Jakarta Stock Exchange Composite Index
Gain in 2017: 17.5%

The rise of the Jakarta Composite Index in 2017 was led by banking stocks on the back of repeated rate cuts by the country’s central bank, Bank Indonesia. Indonesia’s benchmark interest rate has been reduced eight times since the beginning of 2016.

#6 Singapore

Straits Times Index
Gain in 2017: 17.1%

The Straits Times Index has received a boost from bank and property stocks in 2017. DBS Group Holdings, the parent company of DBS Bank, has seen its share price rise by 43% this year. OCBC Bank’s stock price has risen by 38% and UOB’s by 26%. DBS Group Research expects the index to gain an additional 9% to 12% by the end of 2018.

#7 Taiwan

Asian Stock Markets, China, Australia, India, Hong Kong, Singapore, Taiwan, Japan, South Korea, Malaysia, Indonesia

TAIEX
Gain in 2017: 12.7%

Taiwan’s tech sector and its leadership in semiconductor manufacturing contributed to the strong performance of the Taiwan Stock Exchange Capitalization Weighted Stock Index (TAIEX) in 2017. Taiwan Semiconductor Manufacturing, a company with a market cap of about US$200 billion, saw its share price rise by 35% this year. Advanced Semiconductor Engineering registered a gain of 27%. Analysts expect the TAIEX to gain an additional 6% in 2018.

#8 Australia

Asian Stock Markets, China, Australia, India, Hong Kong, Singapore, Taiwan, Japan, South Korea, Malaysia, Indonesia

S&P/ASX 200
Gain in 2017: 7.1%

Australia’s economy is heavily dependent upon exports. China, which accounts for about 30% of the country’s export of goods and services, has increased the volume of its purchases in 2017. Exports to Japan have risen as well. The rise in commodity prices – especially coal, iron ore, and natural gas – has helped to increase the profitability of Australian companies. With an improvement in the economies of its trading partners, Australia can expect its own economy to perform better in 2018.

#9 Malaysia

Bursa Malaysia KLCI Index
Gain in 2017: 7%

A Southeast Asian laggard, Malaysia’s KLCI Index is expected to rebound in 2018. Syed Muhammed Kifni Syed Kamaruddin, head of strategy and quantitative analytics at MIDF Amanah Investment Bank Bhd, points out that corporate earnings have improved and this will likely result in an appreciation in share values next year.

#10 China

Asian Stock Markets, China, Australia, India, Hong Kong, Singapore, Taiwan, Japan, South Korea, Malaysia, Indonesia

Shanghai Stock Exchange Composite Index
Gain in 2017: 5.9%

Although the Shanghai Composite Index did not perform as well as some of its regional peers in 2017, it is expected to register a better performance in 2018. Zhu Bin, a strategist at Southwest Securities, a brokerage and investment banking company based in Hong Kong, predicts that the index will be at a level of 3,700 by December 2018 – that’s an expected gain of 12% in the next year.

The bottom line

Will Asian stocks continue their ascent in 2018? Andrew Swan – head of Asian and global emerging markets equities at BlackRock, a leading asset management firm – thinks so. He says, “Anyone who missed the rally probably wonders if it is too late to join the party. We don’t believe it is.” According to Swan, the continued global recovery and a weak US dollar should see Asian markets rocketing to new heights in 2018.

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