The year 2023 witnessed a notable divergence in the fortunes of investors across Asian markets, as reported by Nikkei. Japan's benchmark index reached a 33-year high, while Hong Kong marked its fourth consecutive year of decline. Meanwhile, India emerged as a leader in initial public offerings (IPOs).
A significant factor contributing to this divergence was the disappointment in China's post-Covid recovery. Hong Kong's Hang Seng Index (HSI), tracking 80 blue-chip stocks, experienced a 13.8% decline in 2023, marking its first four-year losing streak since its inception in 1969.
As investors redirected their focus away from greater China, attention shifted towards Japan, India, and the technology hubs of Taiwan and South Korea. The major indexes in these markets witnessed growth of more than double digits throughout 2023, with Japan's Nikkei 225 leading the way with a nearly 30% increase.
The resurgence of Japanese shares can be attributed to various factors, including improved corporate governance—a focus of regulators for over a decade to stimulate foreign investment. BlackRock, a prominent investment firm, expressed confidence in Japanese equities, reaffirming its "overweight" position for the next six to 12 months. Ben Powell, Chief Asia Pacific Investment Strategist at BlackRock Investment Institute, highlighted the positive impact of corporate reform on market performance.
BlackRock also expressed optimism about India, noting it as a preferred destination for investors amid challenges in the Chinese equity market. The attractiveness of India extends beyond being a substitute for China. Thomas Taw, Head of Asia-Pacific ETF Investment Strategy at BlackRock, emphasized India's status as the long-term growth story in the Asian region.
This shift in equity market dynamics is evident in the realm of initial public offerings. Mumbai claimed the top spot as the global leader in the number of IPOs in 2023, while Hong Kong slipped to sixth place. The changing landscape underscores the evolving investment preferences and opportunities in Asian markets.
(With Agency Inputs)
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