A Year in Asian Stocks: Hong Kong, Japan Make Investors Richest

(Bloomberg) -- There’s no shortage of superlatives to describe this year’s rally in Asian stocks.

A near 30 percent surge marks the biggest outperformance versus Europe and the U.S. since 2003 and 2009, respectively. Markets from India to Indonesia and South Korea have reached record highs, and bumper earnings mean valuations still remain lower than the rest of the world. And -- perhaps the biggest surprise -- that’s all been achieved against a backdrop of North Korea tensions, China’s deleveraging campaign and a stronger yen.

But even amid such a stellar year, there are winners and (relative) losers.

Here’s a look at what happened in stock markets across the continent:

Tech Jump

The MSCI Asia Pacific Index rose to a record on Thursday, surpassing its 2007 peak. Technology companies took center stage with a staggering 54 percent annual gain, the biggest in eight years, buoyed by the success of Tencent Holdings Ltd.’s WeChat messaging service, Alibaba Group Holding Ltd.’s e-commerce business and Samsung Electronics Co.’s gadgets.

Read more: Tencent’s 2,636% Rally Makes This Asian Stock Boom Different

Frontier Surge

A frontier market is Asia’s biggest gainer in percentage terms this year: Vietnam. Its stock market has doubled in size over the past year, fueled by state-owned company sales and listings, and a 47 percent gain in the VN Index.

Developed Markets

When measured by how much wealth has been created for shareholders, however, Hong Kong and Japan come out on top with a combined $2.5 trillion in new market value.

The Hang Seng Index soared 36 percent, helped by the blockbuster performance of Tencent, while the Topix index climbed 20 percent in Tokyo to take Japanese equities back to heights last seen in 1991. The world’s largest money manager, BlackRock Inc., has kept its overweight recommendation on Japan’s stocks, citing solid company earnings and attractive valuations.

China Stumbles

Nearer the bottom of the pack, China’s campaign to cut risk in the financial sector dealt a blow to the stock market, with a mere 6.2 percent gain for the Shanghai Composite Index. Investors rushed into mostly state-owned, large-cap firms, resulting in a record performance gap between those companies and the broader market.

Asia’s worst performers (and the region’s only markets that declined): Pakistan’s KSE100 Index, down 16 percent, and the two-member Laos Composite Index, which fell 1.6 percent.

Most Expensive

India’s $2.4 trillion stock market takes out the title of Asia’s priciest, trading at a record high this week. Investors expect the rally to continue, with analysts at Nomura Financial Advisory & Securities (India) Pvt. saying the nation’s economy “is at the cusp of a business upcycle.” Even so, traders are keeping an eye on politics, with eight states covering a fourth of the nation’s population due to hold elections over the next 12 months.

Steady South Korea

And missile launches by Kim Jong-Un’s regime proved no barrier to South Korean equities, attracting $8 billion in inflows and helping the Kospi index hit multiple records this year.

--With assistance from Andrew Janes Richard Frost Livia Yap and Heejin Kim

To contact the reporter on this story: Divya Balji in Singapore at dbalji1@bloomberg.net.

To contact the editors responsible for this story: Chris Nagi at chrisnagi@bloomberg.net, Sarah McDonald, Cecile Vannucci

©2017 Bloomberg L.P.