The Benefits of Investing in This Foreign Market
I love to travel! It is one of my passions.
With an internet connection, I can trade anywhere at any time.
When I travel to Asia, the U.S. stock market opens at night there. So I usually sleep in late each day and wake up to use my online trading software around sunset.
The last time I was in Asia I was running 40+ scans to find the best stocks to trade there at night!
But what about the Asian market?
For newbie and seasoned traders alike, the idea of playing the Asian stock market might seem exotic.
But, it’s not so different from playing the U.S. stock market or the European stock market. However, you do need to educate yourself on whichever market you choose.
Having said that, it’s my opinion that most successful traders, like my top students, are specialists. What do I mean? They focus on one instrument, like penny stocks, forex, or options. And they choose one market, like the domestic stock market, the European stock market, or the Asian stock market.
Even the big boys — the banks with their fingers in many slices of the world financial pie — have dedicated teams for different markets.
For many traders, the domestic market is enough, but the Asian markets can present an opportunity. In this age of multinational corporations (MNC), it’s a good idea to understand markets in other regions.
You might even decide to jump in and trade…
What Is the Asian Stock Market?
Asia’s securities markets date back over 150 years — and their stock exchanges, nearly as long.
Post-WWII industrial expansion, global trade, and population booms contributed to a surge in the Asian markets. In recent years the tech boom is a primary driver of fast-growing Asian economies.
Before you start looking for great Chinese penny stocks to trade, you should know that the ‘Asian stock market’ is actually many markets.
For example, Japan, China, Hong Kong, Taiwan, India, Malaysia, South Korea, and Singapore all have their own exchanges. There are 49 countries (nation states) in Asia.
That’s a lot of trading opportunities…
The three largest Asian exchanges are the Tokyo Stock Exchange, the Shanghai Stock Exchange, and the Hong Kong Stock Exchange. Combined, they have a trading volume of nearly $8 trillion per year (2015). For comparison, the NYSE had a trading volume of $20.61 trillion in 2011.
What does this mean for you as a trader? Considering all the Asian exchanges and thousands of listed securities, it’s a massive market…
Is it also a massive opportunity?
Benefits of Investing in the Asian Stock Market
Asian economies are booming. Although this year has seen some big drops in major Asian stock markets, Asian economies are still booming compared to much of the world.
Historically, Asia has a strong record for long economic booms. As a whole, Asia enjoys steady, fast-paced growth for several years.
At least seven Asian countries benefit from more than 50 years of gross domestic product (GDP) growth above 3.5% annually. And 11 Asian countries enjoy GDP growth higher than 5% for the last 20 years.
By comparison, the U.S. GDP growth rate fluctuates between roughly .5% and 3.8% annually since the 2008 financial crisis ended.
Some of the stronger Asian economies have multiple years of 6%+ GDP growth! China, in particular, has developed into one of the world’s economic growth powerhouses.
Asian markets are recovering?
A year ago Asian stock market news focused on recovery. But during 2018, while the U.S. markets are roughly even for the year (at the time of writing), around two-thirds of Asian markets are down. The Shanghai exchange is in full bear territory — it’s over 20% down on the year.
I look at this two ways:
As a trader, I look at market sentiment to understand what kinds of plays are available. But it doesn’t change the fact that I open and close positions in a relatively short period of time. You can make money trading penny stocks no matter what the overall market is doing.
When an economy is growing but the stock market is dropping, there might be undervalued stocks to buy. It’s the classic buy-low, sell-high strategy that turned Warren Buffet into a billionaire.
There are Chinese penny stocks. Back to my way of doing things: trading. It’s important to note there are penny stocks in other countries. You can trade penny stocks in China, Japan, India, the Philippines — pretty much anywhere there’s a stock market.
Just as with day trading here in the U.S., you need knowledge. Educate yourself. This guide to finding penny stocks will help you. Expect to overcome barriers before you can trade. If you have any doubts about what you’re doing, stay away.
An Opportunity to Diversify
Investing in Asian markets can be a way to diversify your portfolio. Again, I think you need to be ready before you leap into it. Take your time. Do your research. I focus on day trading penny stocks here in the U.S. for a reason — it’s what I know.
A Different Time Zone
This can be a huge opportunity if you want or need to trade at odd hours. For example, say you want to trade after your regular work hours. The Hong Kong stock market opens at 8:30 p.m. Eastern Time.
A word of caution: While it might seem like a great idea to start trading different markets at different hours…
… this is a degenerate gambler mentality!
You need time for research. You need time to step away from the screen and do things like eat and exercise. You need time to network with other traders (networking is one of my ace student Dominic’s 6 trading tips).
Set your hours and trade. Win or lose, walk away at the end of the day.
With risk comes reward. There it is, plain and simple.
The Asian markets present a new layer of risk and, consequently, a new layer of reward.
Before you jump into the Asian market, you need to really understand the differences between investing in the United States and investing in Asian markets. Because, as you might guess, different countries have different rules!
Tomorrow, we’ll go over these differences in more detail.
— Tim Sykes
Editor, Penny Stock Millionaires