It's a curious thing when the world's biggest growth market, Asia, has dramatically underperformed American and European stock markets, this year and over the past 12 months. Particularly as it should be a key beneficiary of any green shoots of global economic recovery. More curious still is that Asia's most cyclical markets - China, South Korea, Taiwan and Malaysia - which should be the largest winners from any economic pick-up, have been among the worst performers in Asia.
How can this be? There appear to be four factors at play: 1) there's little evidence of an economic upswing in the region 2) yen depreciation has altered the landscape for key export competitors in Asia 3) there are fears over inflation and tighter monetary policy in key economies such as China 4) politics has played a part with leadership transitions in China and South Korea adding to policy uncertainties. Asia Confidential doubts these factors will turn around this year and suggests investors stick to countries/stocks exposed to domestic consumption and which are available at a reasonable price - such as India, Thailand banks and Singapore dividend plays.
Lagging Asian markets
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