Asia Will Lead the Stock Market Recovery

Jul 22, 2022

Vijay Bhambwani, Editor, Fast Profits Daily

The smart money in global financial markets is asking an important question.

Once the market bottoms out, which area of the market, which geography of the world, will lead the markets higher?

The answer is relevant to Indian investors.

So in this video, I'll tell you the answer and the reasons for the same.

Let me know if you agree.

Hello friends. We are all surrounded by some amount of anxiety as to what will happen in the winter of discontent ahead that people are anticipating in Europe, thanks to the Ukraine crisis. And once the market bottoms out, which area of the market, which geography of the world will lead the markets higher?

I'm Vijay Bhambwani. I've traded these markets since 1986 and through my videos, I want to help my online followers and family to take better informed decisions for their trades and investments so as to garner higher return on investment.

So on 23rd June of this year, I had recorded a video saying that this time around, the crisis or decline, if any, a major decline in financial markets might just be triggered by Europe because of obvious reasons. The prevalent tensions, the geopolitical tensions in Russia and Ukraine.

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Now I also recorded a video after that, talking about the lessons learned from the Asian financial crisis of 1997-98. In that video, I told you that the Asian markets have learned many lessons and are planning to avoid any repeat of such events that transpired in 97-98.

I did a recent study about which markets have done what from their recent all-time highs to the current price as I record this video on a Wednesday and closing prices are as recent as I have them on my screen.

Western Indices High Low % Change
Toronto 22213 18938 -14.74
France CAC 7385 6201 -16.03
Germany DAX 16290 13308 -18.31
USA DJIA 36953 31827 -13.87
UK FTSE 7670 7296 -4.88
USA Nasdaq 100 16765 12249 -26.94
Brazil - Bovespa 131190 98245 -25.11
Asian Indices High Low % Change
India Nifty 50 18604 16521 -11.20
Japan Nikkei 225 30796 27680 -10.12
Bursa Malaysia 1620 1437 -11.30
Singapore STI 3466 3170 -8.54
Hang Seng Ix 31183 20890 -33.01
Jakarta SE 7355 6875 -6.53
Korea KSE 3316 2387 -28.02
Shanghai Composite 3709 3305 -10.89
Taiwan 18620 14733 -20.88
Thailand SET Index 1718 1539 -10.42

So on your screen now is a list of what the Western markets have basically done. Toronto is down a little under 15%. France is down around 16%. Germany's down 18%. The US Dow Jones, old economy Dow Jones is down a little under 14%. The new technology index, the NASDAQ 100, is down 27%.

The Bovespa, which is Brazil, my veteran viewers will remember that I tracked Latin America very, very closely for the simple reason that this area, this geography, is responsible for a humongous amount of natural resources exports, especially medals. So Brazil, being the biggest boy out there, I have taken that as a proxy. That has fallen a little over 25% and the FTSE is down a little under 5%

Now, this is the western world. Though not completely exhaustive, the list will give you a somewhat approximate picture of how much the markets have fallen.

Cut forward to the Asian markets, where for obvious reasons, Taiwan because of geopolitical friction between China and Taiwan, Hong Kong markets because they are a proxy of China itself, and the Chinese market, which is in the eye of the storm itself, if you were to take these aside, you will realise that the Asian markets are weathering the storm, relatively speaking, a whole lot stronger, a whole lot better.

So our very own Nifty 50, I start, obviously with our own markets. Our very own Nifty 50 is down a little over 11% from its recent highs that Japanese Nikkei index is down a little over 10%. Bursa Malaysia, which is Malaysia, is down a little over 11%. Singapore Strait Times Index is down a little over 8.5%.

The Hong Kong Hang Seng Index is down 33%. Do remember what I told you. Hong Kong is a proxy for China.

The Jakarta Stock Exchange is down a little over 6.5% showing a good amount of relative strength. The Korean Stock Exchange, here again there is a pocket of weakness here, is down a little over 28% from his recent high.

The Shanghai Composite Index is down a little under 11% which is not half as bad considering what's going on there in the real estate market. The Taiwan Weighted Index is down a little under 21%. Do remember there is a sword hanging over Taiwan of a Chinese geopolitical attack. So which is why Taiwan is down. The Thailand SET index is down a little over 10.42%.

So, as you can see, compared to the Western markets decline of 14, 18, 20, and 25%, the Asian markets, if you leave out Taiwan and Hong Kong, which are in the eye of the storm geopolitically speaking, are doing 8, 9, 10, or 11% declines from their recent highs.

Now in technical analysis, this is called relative outperformance. So if one market is falling 20% and the other market is falling 10% the market that has fallen only 10% is relatively outperforming a market that has fallen 20%.

This relative outperformance invariably sows the seed for strength when the time and tide turns for the better, which is why I think, whenever the market discounts all the bad news about Russia, about Ukraine, about the geopolitical bargaining chip being used of natural gas, when the winter goes away and things start to turn back to normal, I think it will be Asian markets which will lead the charge forward for obvious reasons.

There is a very high probability that once the market starts to pick up the shattered pieces, if it all there is any damage, we don't know yet, I'm just conjecturing but if it all there is any damage and if the market starts to pick itself up, dust away all the bruises, I think India stands to be a very high probability leader of the pack in the Asian segment and Asia, like I told you, is likely to lead the rally upwards, which means we have a very high probability of being the leader in the pack when the recovery starts.

It's a matter of a few months. The winter will be gone by November and maybe early December and we will know what would have happened by then, whether the Russians are supplying a gas and oil to Europe or not. Winter, in any case, whether supplies come in or not would have come and gone. The worst would have been over.

I expect the Indian markets to basically look ahead of the initial speed breaker that you might encounter in the winter and plan far ahead in the future. Markets as it is, are forward discounting mechanisms. There is ample amount of hope there yet.

On this cheerful note I'll bid goodbye to you, not before reminding you click like on this video if you liked what you saw.

Subscribe to my YouTube channel, if you haven't already done so. Click on the bell icon to receive instant alerts about fresh videos being put up out here. Good, bad or ugly, I always look forward to your feedback in the comments segment and help me reach out to smart investors and traders like yourselves by referring my video to your family and friends.

Thank you for your patience and being with me in this video. Till be meet again in my next, this is Vijay Bhambwani signing off for now. Have a very profitable day ahead. Bye.

Warm regards,


Vijay L Bhambwani
Editor, Fast Profits Daily
Equitymaster Agora Research Private Limited (Research Analyst)

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