Stock Markets: USA vs. Asia
Beware … different countries have different rules. If you’re going to trade these stocks, do your homework! Also, you’ll need to find a broker that allows you to trade the Asian stock markets.
For years, playing Asian penny stock markets was a lot like the wild west — few regulations and a lot of speculators. Imagine how ripe these markets are for classic pump-and-dump scams. All the more reason to do your research.
In the past few years there’s been talk of increasing regulations on penny stocks in Asia. This includes the Hong Kong and mainland Chinese stock markets.
Foreign markets are sympathetic to the U.S. stock market now more than ever. But it’s important to recognize that regional markets don’t always trend with the rest of the world. Economic outlook, trade regulations, and other events can influence the Asian financial markets.
One big difference: You won’t be able to use StocksToTrade as your trading platform or stock screener for the Asian stock market. It’s not set up for that now. I mention this because I helped develop the platform and there’s nothing like it out there. I consider it a distinct advantage for trading.
What Time Does the Asian Market Open?
As there are so many different Asian stock exchanges, I won’t list all the times. This handy world stock market map shows you what markets are open at any given time. If you prefer a table format, check out this list of world stock exchange trading hours.
In general: Asian markets begin to open for the next day just hours after they close in the U.S. And in case you haven’t peeped a map in a while, remember that Asia is huge, with several different time zones.
You need to know the relationship between the time zone of your location and the time zone where you want to trade.
Influence of the Chinese Stock Market on Asian Markets
China has a huge regional influence — and it extends right into the stock markets. In much the same way that U.S. markets have a strong worldwide influence, the Chinese stock market influences other Asian markets.
When the Chinese market is down, other regional markets often follow suit. The same goes for when it’s up.
6 Steps to Investing in the Asian Stock Market
1. Importance of Fundamental Analysis
For investing — long-term style — I can’t emphasize the importance of fundamental analysis enough. You may know this is not my main strategy because I trade penny stocks.
However, this is a valid way of determining the long-term value and opportunity of owning a company’s shares.
I don’t completely ignore fundamentals. Without some basic understanding, like what the company sells, you might miss an important news catalyst. You need to know what’s news and what’s not. That’s difficult if you don’t have some idea of the fundamentals.
2. Follow Asian Stock Market News Catalysts
One of the most important things I teach to my Trading Challenge students is to recognize news catalysts. Whether you’re trading weed stocks in the U.S. or micro-computer component stocks in Asia, news catalysts are often the drivers of big price action.
3. Use a Stock Screener
It doesn’t matter where you’re trading, you need to use a stock screener. The trading world is digital and fast paced. A stock screener will let you sift through thousands of stocks to find only those that meet specified criteria.
4. Do Not Trust Stock Promoters
Asian stocks, biotech stocks, weed stocks — it doesn’t matter what stock is being promoted …
… stock promoters make money by pumping stocks. That’s it.
Recently a very well-known financial newsletter publisher in the U.S. ran a ‘single stock retirement plan’ promo. The hyped stock is a well-known Asian computer component manufacturer. They make parts for more than one ‘household name’ tech company.
The hyped company is massive and profitable. It employs more than a million people worldwide. The newsletter that the ‘single stock retirement plan’ used for promotion is a good newsletter. But the hype around the stock was a complete pump move.
Ironically, it’s not even traded on U.S. markets yet. But if you go look at price action on the stock (hint for you sleuths: it trades on the Taiwan exchange) it’s pretty clear the promotion got some blood pumping and the stock price shot up … briefly.
This is the game of stock promoters. They make money by pumping stocks. Be wary.
That’s enough for today. I’ll go over steps 4-6 with you tomorrow. I’ve even pulled together a few tips for you to use when exploring Asian market opportunities…
They’ll help you pinpoint the best choice.
— Tim Sykes
Editor, Penny Stock Millionaires