The Best Asian Stock Markets This Year

BullMarketAll the recent focus has been on the Dow Jones Industrial Index breaking through 15,000 points. There is no question that the US market has performed well again this year thanks to Federal Reserve chief Ben Bernanke’s continued fondness for printing money.

But perhaps Bernanke was right when he defended the actions of the US Federal Reserve and Europe’s central banks by saying that they are helping to boost the global economy too. The twin strategy of Quantitative Easing and rock-bottom interest rates has not only lifted US asset prices but it has also hoisted stock markets around the world by their bootlaces.

Here in Asia, stock markets have definitely been on a tear. In fact four Asian markets rank in the top ten best-performing markets this year, with Japan leading the field.

The Nikkei 225 Index is up a whopping 37% since 1 January thanks to Prime Minister Shinzo Abe’s policy to increase government spending and print oodles of yens to boost inflation. The strategy, which has been dubbed “Abenomics”, bears many of the hallmarks of Ben Bernanke’s monetary policy. Thanks to Abenomics, even Japan’s electronics giant Sony managed to post its first annual profit in five years.

Philippine investors have given President Benigno Aquino’s economic strategy of boosting government spending a massive thumbs-up. The Philippines Stock Exchange PSE Composite Index is 24% higher today compared to the start of the year. Aquino’s master-plan could even cement Philippine’s position as the third fastest-growing Asian economy behind China and Thailand.

Indonesia’s Jakarta Composite Index broke through 5,000 points this year helping the benchmark index register an 18% gain since the New Year. Indonesia, which is the fifth most populous country in the world, is hoping that the introduction of a minimum wage will help to spur economic growth by encouraging more consumers to whip out their wallets.

Vietnam relies heavily on exports, so a global economic recovery could give its manufacturers a massive boost. In fact, hopes of an economic revival have boosted the country’s stock market as measured by its benchmark index the Vietnam VN-Index, which is up 18% this year. The market is still considered cheap, though the cheapness may be a reflection of investor scepticism.

Thailand’s SET Index is up 16% this year thanks to a flood of foreign capital that has flowed into both the stock market and the property market. The Shinawatra government is also planning to spend heavily on water-management infrastructure projects to prevent a repeat of the floods that devastated the 2011.

Finally, the sixth best-performing Asian stock market this year is Singapore. It is up a respectable 9% year-to-date. The rise of Straits Times Index (SGX: STI) has been driven by the heavyweight bank, which has seen DBS (SGX: D05) put on 20%; Overseas-Chinese Banking Corporation (SGX: O39), which is up 14% and United Overseas Bank (SGX: U11) has gained 10%.

Interestingly, not everyone has been convinced by the bull rally. There are still many who doubt that the rise in global equities is sustainable. That’s a good thing because when the last bear decides to throw in the towel, then that is the time to be circumspect.

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