• 47 mins The Corporate Buyback Bubble Is Bursting
  • 3 hours Worst December For Stocks Since The Great Depression
  • 18 hours 5 Marijuana Plays To Watch In 2019
  • 19 hours North America’s Largest Diamond Ever Discovered In Canada
  • 22 hours Bad News Builds For Global Markets
  • 1 day Tesla Cuts Prices As China Suspends Auto Tariffs
  • 1 day The Pitfalls Of Mining In Latin America
  • 2 days How A NASA Scientist Could Trigger The Next Cannabis Boom
  • 2 days Zero-Fee Trading App Eyes ‘Amazon of Banking’ Status
  • 3 days Cheap Power Lures Crypto Miners To Iran
  • 4 days Bitcoin Capitulation Is Not Over Yet
  • 4 days Congress Learns About The Internet
  • 5 days Gibraltar Flare-Up Could Further Complicate Brexit
  • 5 days Marijuana Looks For Its Next Big Win In New York
  • 5 days This Billion Dollar Project Is Reshaping The LNG Business
  • 5 days China Is Taking Data-Mining To The Next Level
  • 6 days Analysts Bet On Potential Fed Rate Hike For Christmas
  • 6 days Corporate Bounty-Hunting Raked In $168M This Year
  • 6 days The Science Behind Melting Gold At Room Temperature
  • 6 days Saudi Aramco Hit With New Variant Of Old Cyberattack
Saudi Stocks Plummet As Foreign Investors Bail

Saudi Stocks Plummet As Foreign Investors Bail

The death of journalist Jamal…

The Corporate Buyback Bubble Is Bursting

The Corporate Buyback Bubble Is Bursting

Corporate stock buybacks have surged…

Charles Benavidez

Charles Benavidez

Staff Writer, Safehaven.com

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…

Contact Author

  1. Home
  2. Markets
  3. Other

Asian Stock Markets To Hit $56 Trillion

Beijing

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