Looking back over 2022, there is no doubt that global issuesimpacted the APAC region. Even though many experts believe that the Far East is set for significant relative growth compared to the US, UK and Europe, 2022 was challenging. We will now look at the leading APAC indices and their performance over the calendar year 2022.
Global Dow World Index (4137.77-3696.4)
Performance during 2022: -10.7%
YTD: 8.23%
To put the performance of APAC indices into context, we have also calculated the performance of the Global Dow World Index. This allows us to compare and contrast against the general global trend. While similar financial issues have impacted all areas, timings have been different, and there are also local political challenges to consider. Since the turn of the year, the Global Dow World Index has increased by around 8%.
China: Shanghai Composite (3639.78-3089.26)
Performance during 2022: -15.1%
YTD: 5.6%
China: Shenzhen Composite (2530.14-1975.61)
Performance during 2022: -21.9%
YTD: 7.6%
Over the last few years, the Chinese government has welcomed overseas investment and is looking to expand the successful "stock connect" programme. This allows major Chinese companies to facilitate secondary listings on the Hong Kong stock market, where global investors trade.
While Covid and numerous lockdowns have heavily impacted the performance of the Shanghai Composite and Shenzhen Composite, there is now light at the end of the tunnel. In line with renewed optimism, since the turn of the year, the Shanghai Composite has increased by 5.6% and Shenzhen Composite by 7.6%.
Hong Kong: Hang Seng (23397.67-19781.41)
Performance during 2022: -15.42%
YTD: 14.7%
While many will be surprised to see the Hang Seng underperform the Global Dow World Index in 2022, it is worth remembering the significant knock-on effect fromChinese Covid related lockdowns. Interestingly, since the turn of the year, the market has been the best performer in the region, with analysts extremely optimistic about the short, medium and long-term outlook. Hong Kong is fast becoming the financial hub of the Far East and the wider APAC region.
Japan: Nikkei 225 (28791.71-26094.5)
Performance during 2022: -9.3%
YTD: 4.9%
Japan has been in the midst of an economic crisis for approaching 30 years, although there are some signs of a partial recovery. Consequently, many analysts believe that theNikkei 225 was already starting from a relatively low base and, therefore, less impacted by the Covid pandemic and associated challenges. While there are some reasons to be optimistic for the future, in relative terms, the Japanese economy is losing ground against China and the US. It will also be overtaken by up-and-coming economies such as Indonesia over the next decade.
India: S&P BSE Sensex (58253.82-60840.74)
Performance during 2022: 4.4%
YTD: -2.4%
The oldest Indian stock market index performed admirably during 2022, with a relative outperformance approaching 15% compared to the global barometer. While 2023 has started on the back foot, with the index slightly down, India is edging closer to becoming an economic powerhouse. The introduction of digital services, modern far-reaching infrastructure and forecasts of strong economic growth in the short, medium and long-term bode well for the future.
Singapore: Straits Times (3123.68-3251.32)
Performance during 2022: 4.0%
YTD: 4.3%
Singapore and Hong Kong are now the go-to financial market for local and global investors. Relative solid outperformance in 2022 and a positive start to 2023 bode well for the next 12 months. Innovative and forward-thinking, it looks like 2023 could be a battle royal between Singapore and Hong Kong. Is there space for two leading financial hubs in the region?
Summary
It is easy to fixate on short-term expectations without appreciating historical figures. Looking back, performance varied across leading indices in the APAC region during 2022. However, the region is well-positioned to benefit from the eventual global recovery, attracting greater inward andinternational investments which will contribute to significant economic growth.