Stock Market Growth in Unexpected Places: ASEAN

Martha Stokes, CMT Martha Stokes, C.M.T. is the co-founder and CEO of TechniTrader®, an
educational firm dedicated to helping small investors and retail traders since 1998.

China is a closed market to foreign investors which leaves it highly vulnerable to internal economic conditions within that country. For now, China has been able to quell Chinese investors as the economy continues to slip downward, real estate prices continue to fall, and debt continues to rise. However, investors around the world are continuing to invest in ASEAN.

The Association of Southeast Asian Nations includes Singapore, Philippines, Indonesia, Malaysia, Thailand, Brunei, Vietnam, Laos, Myanmar, and Cambodia for a total of 10 member nations. These nations combined have developed a growing stock market consortium in the Asia Minor region.

The association promotes economic growth, social progress, cultural development and protection of regional piece. This region of the world has approximately 600 million people or almost 9% of the world’s population.

Singapore is one of the world’s fastest growing stock exchanges. GDP for ASEAN is growing exponentially as China’s economy wavers and falters. One of the big benefits was China’s move from low value manufacturing goods to high-end technology goods in recent years. Many manufacturing low value products were transported to these countries, providing much needed jobs, exporting to the Americas and Europe and providing a huge boost to the 10 countries economic growth. The regional GDP was 2 trillion in 2011, a big surprise to many global economists.

ASEAN is taking an approach to its growing financial markets that may be adopted elsewhere in the world. ASEAN Trading Link was established in late 2012 to provide a smooth efficient “gateway” for international brokers to offer investors easy access to the ASEAN interconnected exchanges.

Working as a unit, these 10 nation’s exchanges help each other grow and compete in the global marketplace, creating more investment opportunities in over 2200 listed stocks on the Singapore Exchange in addition to US listed stocks. Technology has become less expensive and easier to integrate, opening opportunities for the ASEAN community.

Retail investors who are a key market participant group for any financial market, are investing in ASEAN markets and their activity is accelerating, providing jobs and growth for ASEAN. Meanwhile China’s closed market and corrupt banking system, continue to internalize problems that will plague that nation for years to come.

Emerging markets saw a decline of US institutional investments in the past few months in response to China’s internal debt problems, which are escalating. However the ASEAN markets should not be totally dismissed as these markets may benefit from China’s economic contraction, IF their economies can take advantage of a weakening dominance of Chinese exports.

Moving into the voids that the Chinese government created when they insisted on all Chinese manufacturing abandoning the low-value manufactured product for the high-end, high-tech product may have seemed like a wise decision. However it has severely damaged the Chinese infrastructure for middle-class manufacturing workers. Without the low-value products that built the Chinese economy of the 90s and first decade of this century, China may have unwittingly caused a more serious internal structural manufacturing problem.

Vietnam, Thailand, Cambodia, Malaysia and the rest of the 10 nations of the ASEAN community benefited as more US and European businesses sought out manufacturers in those countries to fill low-value manufacturing product orders.

Whether ASEAN can prosper further from a declining Chinese economic dominance in that region, is a question that will be answered in the next couple of years. A strong group of exchanges with plenty of listed stocks along with an open marketplace inviting foreign investors, rather than shunning foreign investment, is the best way to ensure continued growth and prosperity for the ASEAN community.

Martha Stokes CMT and CEO of TechniTrader®

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