Australia
China
India
Indonesia
Japan
Malaysia
Philippines
Singapore
South Korea
Taiwan
Thailand
Vietnam
The Asian stock markets ended 2023 on a positive note with the MSCI AC Asia Pacific Index climbing 11.9% during the year.
“Asia’s resilience to higher US interest rates and a stronger US dollar were also positive. Inflation has been relatively well managed, and companies and countries managed US-dollar-denominated debt exposure to prevent any economic fallout,” says Fidelity International.
“There was also a distinct market preference for value stocks, leading to many high-quality growth stocks trading at attractive valuations,” adds the asset manager.
However, in terms of regions, the Asian stock markets witnessed diverse performances. Japan, Taiwan, South Korea, India, and Vietnam led the gains, while China, Hong Kong, and Thailand finished the year with losses. The winners performed well due to region-specific macroeconomic factors, the decliners were dragged down primarily by China’s weak post-Covid recovery and property woes.
Japan, Taiwan, and South Korea see a winning streak
The Nikkei 225 emerged as the top performer in Asia in 2023 and surged over 30% after touching a 33-year high in January last year. The resurgence of Japanese shares was due to a mix of factors such as Bank of Japan’s (BoJ) dovish policies, enhanced corporate governance, and robust earnings by Japanese automobile companies. Moreover, foreign investors flocked to the Japanese market, and the technology and real estate sector witnessed massive fund flows.
Taiwan’s Taiex gained over 24% by the end of 2023 marking the second-largest annual increase in its history. One of the primary drivers of this growth was contract chipmaker Taiwan Semiconductor Manufacturing (TSMC) which soared 40.2% over the year. The region’s stock market also soared ahead of the elections due in mid-January that would determine the course of the country’s relations with China. In November, foreign investors pumped in $7.6 bn in Taiwanese equities, which indicates that their optimism over chip stocks has outweighed political concerns.
South Korea’s KOSPI Composite Index was another strong performer in the Asian stock markets, as it ended the year with more than 19% gains. Interestingly, the small and mid-cap index KOSDAQ outperformed and climbed over 27% during the period. According to S&P Global, “As market valuations have increased throughout 2023, young investors are reportedly looking towards “hot” stocks in the science and technology sectors to boost returns.”
In early November, the KOSPI posted over 4% gain in a single day after Korea’s Financial Services Commission (FSC) imposed a ban on short selling on stocks of the Kospi 200 Index and Kosdaq 150 Index until June 2024. The government also planned to launch an investigation into “naked” short selling by global investment banks.
Indian equities witnessed significant gains in 2023, specifically towards the last quarter. The Sensex and Nifty 50, both, climbed over 18% by the end of 2023. The country has been resilient to the global macroeconomic downturn and geopolitical turmoil. In the third quarter, India’s GDP expanded by 7%, on the back of manufacturing activity and consumer spending. Optimism over the results of the 2024 general elections is also a major cause of the stock indices doing well.
Besides, India emerged as one of the top IPO performers in 2023. The country witnessed 46 new listings and collectively raised $7.1 bn during the year. In the global share of funds raised through IPO, India’s share rose to 5.6% in 2023 compared to 4.1% in the previous year.
Vietnam’s benchmark VN-Index posted over 14% rise in 2023. According to the State Securities Commission of Vietnam, the stock market’s capitalisation climbed 10.1% year-on-year in November and reached $236 bn. Market analysts suggest that the period of economic slowdown ended earlier last year post and Vietnam markets have gone through a period of stabilisation. Attractive valuations and an upbeat earnings outlook led to strong gains in Vietnamese equities this year.
China pulls down Hong Kong and Thailand markets
China has been grappling with economic issues since the beginning of 2023. The CSI 300 covering the majority of stocks in Shanghai and Shenzhen plunged 11.4% by the end of the year. Disappointment over the lack of adequate measures from the government and a debacle in property sector stocks led to major losses. Also, concerns over a rise in bad debt due to overexposure to real estate developers pressurised the Chinese banking stocks.
Finally, the last week of December saw China cracking down on online gaming companies. The country imposed stringent regulations to control spending and rewards encouraging video games. Reports indicate that this news wiped off nearly $80 bn in market cap from Tencent and NetEase, two of the largest gaming companies.
Hong Kong’s flagship Hang Seng Index dropped 13.8% in 2023 due to a significant skewing toward Chinese financial stocks. In early January, the Hong Kong market rallied but interest rate hikes and a downturn in the Chinese economy impacted its markets. Even the Mainland investors stayed away from stocks listed in Hong Kong. They bought $40.6 bn worth of shares through the Mainland Connect scheme, the lowest since 2018.
Similarly, Thailand’s SET index declined 15.2%, because of the country’s heavy reliance on China’s economy and its tourists. Investors’ lack of confidence in Thai stocks resulted from political uncertainty and a weak baht. Moreover, an accounting scandal leading to a bond default of the Thai wire-maker, Stark Corporation, jolted investors.
