• 2 days The Shroom Boom Is Here To Stay
  • 3 days Biden Will Be A Boon For Solar Stocks
  • 5 days The Gold Rally Has Finally Run Out Of Steam
  • 5 days Citibank Analyst Predicts $300k Bitcoin By End Of 2021
  • 8 days Bitcoin Lives Up To Its Safe Haven Status In A Big Way
  • 8 days 14 Million People Will Lose Unemployment Benefits On December 31st
  • 10 days Why 12 Million American Millionaires Isn’t Good News
  • 11 days Big Oil Is Paying The Price For Investing In Renewables
  • 12 days The Banking Industry’s $35 Billion Gravy Train Could Disappear
  • 13 days Did Amazon Just Democratize Prescription Drugs?
  • 14 days The Private Space Race Just Got Very Real
  • 16 days Short Sellers Are Willing Big In This Turbulent Market
  • 17 days SpaceX Gets Go-Ahead To Send Humans Into Space
  • 18 days Saudi Arabia Lost $27 Billion In Oil Crash
  • 19 days China’s Big Tech Takes A Hit As Regulators Crack Down
  • 20 days Black Friday Could Be Retailers’ Only Hope
  • 21 days Why You Should Not Dump Your Stay At Home Stocks Just Yet
  • 22 days The Real Reason Why Uber And Lyft Stocks Have Soared Nearly 50%
  • 24 days Bitcoin Heads Towards $16,000 And No One’s Cashing In
  • 25 days Elon Musk’s $250 Tesla Tequila Is Already Sold Out
What's Behind The Global EV Sales Slowdown?

What's Behind The Global EV Sales Slowdown?

An economic slowdown in many…

How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

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