By Mike Caggeso
Associate Editor
The majority of Asian stock markets made monster gains for the year in 2007, despite volatile dips in the first and fourth quarters. Analysts are expecting Asian stocks to boom again in 2008, following a period of continued declines early in the first quarter of the New Year.
After dropping 9% on one day in February, which for the first time triggered a global sell-off in other countries, Chinese shares rebounded to rise 93% in 2007.
Other major bourses performed well too - Indian shares gained 47% for the year, South Korea stocks rose almost 32%, Singapore was up 17%, and South Pacific neighbor Australia was up 12%, according to the Associated Press. Among the smaller Asian markets, Indonesian shares jumped 52%, Malaysia's market rose 32%, Thailand shares went up 26% and the Philippines' market moved 21%.
In a field of winners, there were some losers, however. Japan's Nikkei 225 index contracted by 11% and New Zealand's NZW-50 index tightened by 0.3%.
Comparatively, the blue-chip Dow Jones Industrial Average Index rose 6.77%, the tech-laden NASDAQ Composite Index gained 7.81% and the broader S&P 500 Index rose a meager 3.45%. Each of those year-end gains came after volatile swings throughout the year.
Asian Gains Give Decoupling Theory Weight
Many of these Asian countries shared some the pain of the U.S. mortgage meltdown. And the devalued dollar reduced prices of exported U.S. products, weakening domestic sales overseas. But the majority of countries posted record gains, even as the U.S. markets faltered.
"More will be revealed after one or two months of data on the U.S. side to see what's the state of the U.S. economy, especially the consumer spending," Song Seng Wun, chief executive of CIMB-GK Research Pte. Ltd. in Singapore, told the Associated Press. "If [the U.S. economy] can hold, then we should be reasonably intact."
The continued gains of the Asia markets in 2007, while the U.S. market lagged, gives more weight to decoupling theory - the process where one economic superpower becomes less and less dependent on another.
"In the years ahead, the world will increasingly revolve around consumers from China, Eastern Europe and even the Middle East. This will create a bold new world when it comes to profit potential, particularly when you consider just how much weaker the dollar could get even from the historically low levels that it's trading at right now," said Keith Fitz-Gerald, Money Morning's Investment Director.
News and Related Story Links:
- Associated Press:
Asian Markets Strong in 2007
- Associated Press:
Rollercoaster Asian stocks set to rise in 2008: Analysts
- Money Morning:
The Three Ways to Profit From a Messy Market