"No warning can save people determined to grow suddently rich" - Lord Overstone

  • 6 hours The $85B Merger That Could Change The Media Forever
  • 7 hours Why Are Governments Creating Their Own Cryptocurrencies?
  • 8 hours How Debt Cycles Impact Gold
  • 9 hours Investors Up the Ante In $1.5B Uber Loan Deal
  • 11 hours Are Gold Miners Poised For A Breakout?
  • 12 hours Is The "Crypto Winter“ Over?
  • 14 hours China Says It Doesn’t Fear Trade War
  • 1 day Twitter CEO: The World Will Have A Single Currency
  • 1 day Asian Currency Correction Could Signal Looming Crisis
  • 1 day Best Buy Drops Telecom Giant Over National Security Threat
  • 1 day The Pros And Cons Of The Federal Interest Rate Hike
  • 1 day Good News For Gold Bulls Despite Interest Rate Hike
  • 1 day Trump Hits China With $50 Billion In Tariffs
  • 2 days Russian Gold Reserves Hit Record High Amid Rising Tensions With West
  • 2 days Stocks Pull Back Following Interest Rate Hike
  • 2 days Will Regulatory Rollbacks Make Banks 'Too Big To Fail?'
  • 2 days Elon Musk’s $2.6 Billion Tesla Challenge
  • 2 days Tech Giants Could Be First Victims Of U.S. Trade War
  • 2 days Dow Gains Despite Fed’s Rate Hike
  • 2 days The Biggest Threat To Chinese Oil Futures
Charles Benavidez

Charles Benavidez

Charles Benavidez is a writer and editor for Safehaven.com. Charles is located in New York City and has over 5 years of experiencing covering financial…

More Info

Asian Stock Markets To Hit $56 Trillion


Set to double in 10 years, the Asian stock market will overtake all others, says Morgan Stanley, in a rapid growth phase that will put it $14 trillion ahead of North America.

Led by China/Hong Kong and India, Asia’s total stock market capitalization will surge from $29 trillion today to $56 trillion by 2027, according to a 51-page Morgan Stanley report.

In that same period, U.S. and Canadian stock markets combined are expected to grow to $42 trillion.

While China and Hong Kong should be the biggest sources of growth, according to Morgan Stanley, India’s stock market will be the fastest-growing and is expected to surpass $6 trillion.

The rapid growth for Asian equity markets will be driven by strong GDP growth, the next stage of market development, regional financial integration and financial sector reforms.

(Click to enlarge)

Not only is the cost of equity in Asia expected to decline by 150 basis points, but more households are set to jump on the market, moving away from bank deposits.

Asia household bank deposits versus equity investments are much higher than in North America, where bank deposits are at only 14 percent, compared to 53 percent in Japan and 44 percent in the rest of Asia.

“We see pension funds, mutual funds, insurance, and equity and debt capital markets as primed for accelerating growth,” Morgan Stanley said. “This will be driven by rapidly rising household wealth, demographic change, structural reform, technological change, and the development of institutional investment capacity.”

Insurance assets are expected to skyrocket in Asia, reaching $20 trillion by 2027—a major leap from only $7 trillion in 2016.

The Asian dollar bond market is already nearing the $1-trillion mark, and its upward journey isn’t likely to change direction, while foreign-currency bonds comprise 3.3 percent of Asia credit (without Japan). That’s up from 1.7 percent in 2007. Comparatively, Europe’s is at 6 percent.

For investors, the Asian stock market catch-up is a prospective bonanza.

Investors will be eyeing financial companies with cross-border banking, such as AIA Group (Hong Kong), Bank of China Limited, CITIC Securities Co. (China), Macquarie Group Limited (Australia), DBS Group Holdings (Singapore), Sumitomi Mitsui FG (Japan), among others. Related: Aston Martin Challenges Rolls Royce Ahead Of Possible IPO

Morgan Stanley also noted that the use of the Chinese yuan in the global financial system will continue to lag behind, despite major financial market development over the next 10 years.

Predicting that the yuan could move to fourth place in global foreign-exchange trading during this period, Morgan Stanley said, it is not likely to challenge the yen for the top slot in a decade.

A 2018 World Bank report puts global economic growth at 3.1 percent his year, with China, East Asia and Asia-Pacific the fastest-growing regions. The International Monetary Fund (IMF) says emerging and developing Asia will grow around 6.5 percent this year and next, accounting for over half of world growth.

According to Bloomberg, China’s economy should overtake the Eurozone in terms of size this year, with Chinese GDP growth forecast to hit $13.2 trillion in 2018, while the combined Eurozone figure is $12.8 trillion.

By Charles Benavidez for Safehaven.com

More Top Reads From Safehaven.com:

Back to homepage

Leave a comment

Leave a comment

Sign Up For The Safehaven Newsletter