Supported by improving global economic conditions and positive factors for structural growth, Asian stock markets continue to maintain good prospects.

Following last year's solid performance, the strong performance of Asian markets in the first quarter of this year was encouraging. More strikingly, however, the strong performance took place in a mixed environment of identifiable risks. these include inflationary pressures, a sharp rise in bond yields, concerns about a tapering of the Fed's bond purchases, repeated novel coronavirus outbreaks, regulatory scrutiny, supply chain disruptions, increased US pressure on Chinese technology companies, and a shift in market investment style from last year's winners to other areas.

Looking ahead, economic indicators in Asia are expected to improve. The US economy is expected to lead the global recovery in the next two quarters as the US government continues to launch a massive fiscal stimulus package and the Fed continues to be patient and guided. At the same time, China is fine-tuning the trend of economic growth recovery to make the economic growth trend towards a higher quality and more sustainable direction. This is expected to have a positive impact on the economic prospects of major export-oriented Asian economies such as Taiwan and South Korea. As vaccination efforts in Asian countries are likely to accelerate this year, the economic recovery is expected to gain momentum, especially in large domestic demand economies such as Indonesia, which will benefit from the positive factors of structural growth.

Although companies still face continuing challenges such as supply chain disruptions, their performance at the beginning of the year was strong. At the same time, it is clear that a new round of capital spending is under way, especially in industries such as technology. The reason is, on the one hand, because of the strong recovery in demand, and on the other hand, the popularity of many long-term growth products and services is faster than expected. In fact, leading indicators of capital spending, such as capital imports from South Korea and Taiwan, suggest that this trend has begun.

In this environment, coupled with the expected acceleration of corporate earnings growth, relatively attractive valuations and still low holdings of global investors, Asian stock markets remain attractive.

Although the Asian economy has experienced decades of rapid growth, the structural transformation that has lasted for many years is still under way. For example, ASEAN countries may still lag behind China and the rest of the world in the Internet economy, and technology stocks have a low share of the stock market, but that is rapidly changing. SEA Limited is currently the largest technology company in ASEAN, and Grab, another Internet giant, may also go public soon, which will change the structure and composition of ASEAN stock market. There is a similar trend in the Indian market.

At the same time, China has taken the lead in some green technologies, such as the solar industry, and has set a goal of achieving carbon neutrality by 2060. However, given the scale of China's emissions, it may be necessary to use more advanced technology to achieve this goal; investment opportunities are expected to be found in many attractive companies that can help China achieve this goal. In terms of the trend towards supply chain diversification, China needs to develop its own technology supply; this will once again create attractive opportunities for companies involved in this structural theme. Similarly, India is gaining momentum. India draws lessons from China's experience, seizes the current opportunity of supply chain diversification, and attracts investment from multinational corporations through preferential tax policies and the advantages of a large consumer group. As a result, India is acquiring investment and is expected to increase its economic growth engine in the coming years.

Looking at the current market, look for investment value in companies that are involved in long-term growth, such as the popularity of technology (digitization and the Internet of everything), changes in lifestyle and social values (sustainability, millennials / generation Z consumption trends, health economy), and de-globalization (supply chain diversification / split in two and corporate backflow). The share prices of some companies involved in these themes have fallen recently, making their valuations more attractive and sometimes even providing investment opportunities to buy companies in a favorable position at bargain prices.

Risk Warning: The above content is for reference only, and does not represent JRFX’s position. JRFX does not assume any form of loss caused by any trading carried out in accordance with this article. Please consult your financial planner for your investment portfolios and manage your own risk.

JRFX is an online CFD broker providing more than 50 products for Forex, metals and commodities. Open a trading account within a minute. Deposit 100USD and download our MT4 trading platform now!