The potential of the Asian markets moving forward is unprecedented, but how do investors get directly involved? Investors in the western world have had difficulty purchasing companies in Asian countries.
Asian markets are known for extreme volatility, too. What is the best approach investors can take when trying to tap into Asian markets?
Economic Forecast
Assessing the economic forecast of Asian markets is key to making any investment decisions. Right now, most countries are flexing their economic muscles coming out of the pandemic. Three countries that are exhibiting the most economic stability are China, Korea, and Indonesia.
These countries bouncing back quickly shows economic strength, but there is more to the story. Long-term growth is going to be derived from the ability of these countries to compete with more developed countries. Productivity is on the rise, but there are certainly quite a few more factors to the equation. If you want some good, detailed context read this piece on how Asia-Pacific beat the world.
Geopolitical Landscape
Not only are countries utilizing governmental powers to restore economic order throughout the world, but each of these countries face relations with each other, too. The pandemic slowed tensions between countries, but they are still present. The pandemic has slowed the ability of many countries to export goods and restart their economic engines. China has problems with its borders at the moment, too.
The Dominance Of China
China does not operate under a democracy, and given its size, the country has dominated the eastern world for quite some time. The country flexes its muscles to keep its place among global superpowers, and China also has plans to try and unseat the United States as the world’s largest economic power. This country means business, but the companies in China are not very transparent when it comes to their financials. This sometimes leaves investors in the dark.
China is home to new mega-companies and businesses that cater to many of the top technological trends. In order to tap into Asian markets, you can also use index funds vs buying companies like Nio directly.
China’s Neighbors
With China’s dominance of the Asian markets, what becomes of the country’s neighbors? Watch emerging markets closely, particularly countries like Vietnam. Vietnam has been growing economically for the last several years, and people are taking notice. Not only that, but the country dealt with the pandemic relatively well. The GDP growth rate in Vietnam is right around 7 percent, which is outstanding.
Thailand has also been making a splash for decades. Many investors are taking notice of the economic development in this country known for travel and tourism. The market in Thailand has risen an average of 14 percent each year over the last two decades. That is truly impressive, and it shows that the country is ushering in wealth for its citizens.
Do Not Forget India
India’s markets are volatile, but that is because of all the growth the country has seen in recent years. Surely, investors have whiplash when looking at India’s economic forecast. Progress may have stalled a little for now, but it is obvious to many investors that India is a huge player in Asian markets moving forward. In fact, the market in India has pulled back, providing investors with the perfect opportunity to jump in and get their feet wet.
Maybe the market in India should be the first place you look. Remember that diversification is always key. While you want to tap into the Asian markets, think about diversification as you make your selections. Consider index funds so that you are able to tap into the markets more, too.