By Nick Chen

Investing.com: Looking back at 2021 we see the struggle between the fight against the pandemic as well as maintaining openness in the global economy. The divergence in global stock indices was influenced by how countries responded to COVID-19.

Global stock indices were up in general. In Asia, Vietnam, India, and Taiwan were the three best performing stock markets last year, with Vietnam’s up 43% for the year, India’s up 24%, India’s up 22%, and the up 24%.

This article will discuss the factors that led to the strong performance of three stock exchanges in Vietnam, India, and Taiwan in 2021, and whether these stocks are still profitable for investors in 2022.

Vietnam: The influx of retail investors pushes stock prices higher and expects a strong economic recovery in 2022

Vietnam was the global leader in controlling and preventing pandemics. As we approached 2021, however, Vietnam’s pandemic outbreak grew rapidly. The Delta mutant strain began to spread in May, and Ho Chi Minh City, Vietnam’s capital, was subjected to several social lockdowns. The VN30 index rose all the way up to an astonishingly low level, despite the fact that the Vietnamese stock exchange was not affected. new all-time highOn Nov. 26,

Domestic retail investors are a major part of the Vietnamese stock market’s success, just as the U.S. meme stock boom of January left an indelible mark on 2021. Local media reports that data from Vietnam Securities Depository revealed that there were more than 220,000 new accounts opening in Vietnam’s stock market in November 2021. That is an increase of 70% over a year and a record for a single month. At the end November, there were 4.03 million securities account openings, which already accounts for 4.09% in the nation’s population. In December 2018, 1.3 Million accounts had been opened by retail investors in Vietnam. This is three times more than the 2020 figure.

Interestingly, on June 1, the Ho Chi Minh City Stock Exchange (largest stock exchange Vietnam), experienced a technical failure. This occurred due to high trading volumes caused by the inflow of retail investors.

In the long-term, the rapid increase in stock markets is an indicator of the nation’s economic health. Some market participants feel that, although Vietnam’s GDP dropped by 6.17% in the third quarter, which was the worst quarterly drop in history, its fundamentals are still positive. This should mean that Vietnam’s stock markets will continue to perform well over the long term.

As well as the Vietnamese government, local institutions and organizations are positive about Vietnam’s economic rebound this year. Vina Capital is a Vietnamese investment company that expects Vietnam to grow its GDP by 2.5% to more than 7 percent in 2021. The Vietnamese government has set an October 2022 goal of a 6-6% year-on-year GDP growth.

Vietnam follows the East Asian Model, which is a government-led export-driven economic development model. It has been followed by many East Asian countries before. Vietnam played an important role in reconstruction of global supply chains after the pandemic. Many analysts think that Vietnam’s population, Asian position and attractive valuations offer upside potential for stock prices.

The fact that Vietnam’s stock exchange has been growing is something foreign investors need to know. According to Bloomberg data, Vietnam saw a record sale of stocks worth $2.7 billion in 2021.

India: Large infrastructure projects, ample stock market liquidity

Like Vietnam, India’s economy has faced serious challenges from the coronavirus virus pandemic.

India increased liquidity to the Indian stock market through low interest rates. In fact, the Reserve Bank of India held the key repo rate down to 4% in 2021, helping reverse the recession. There was plenty of capital in India’s stock market and the market was predicted to rise throughout 2019.

Investors should also note that India’s Prime Minister Narendra Modi, at India’s Independence Day Celebrations in August 2021, announced that India will launch an INR100 billion infrastructure plan to help it adapt and overcome the effects of the pandemic. The majority of infrastructure funds are invested in transportation, and half the total amount is dedicated to roads and railroads. This was observed by market participants. Our next conclusion is that the infrastructure plan will not only boost the Indian economy but also help the Indian stock markets, particularly the stocks in the infrastructure sector.

Nomura Securities included the Indian stock exchange in its outlook for 2022. It reiterated its “neutral” rating of Indian equities in the 2022 stock market outlook. The bank stated that it believes India’s performance is a strong indicator. Indian equities in 2021It has been a major draw for its attention. Nomura thinks that Indian companies’ strong earnings in 2022 will support high prices-to-earnings ratios of Indian stocks.

Taiwan: Semiconductor Crisis winners

Stocks in Taiwan plunged more that 8% during May. This was due to Panic over the Delta Covid-19 coronavirus strain. But they soon recovered as pandemic worries subsided.

The data shows that Taiwan stock prices have increased more than 20% in three years. three-year cumulative gainAn increase of over 90% Not unlike India or Vietnam, Taiwan’s growth in 2021 was largely due to the global semiconductor crises.

Taiwan Weighted Index (a benchmark index for Taiwan stocks) is calculated by weighting stocks based on market capitalization. A larger market capitalization has a greater impact on the index. Taiwan Semiconductor Manufacturing Taiwan TW:: (NYSE:), MediaTek Inc Taiwan (TW:), are the three largest constituents of Taiwan Weighted Index. Hon Hai Precision Industry Co Ltd. (TW:) is responsible for one-third the market capitalization overall of the broad market. These stocks are a major influence on the Taiwan Weighted Index’s performance. In 2021, TSMC shares, MediaTek and Hon Hai rose 16% and 59% respectively, while 13% and 13% were recorded, respectively.

MediaTek and TSMC are on a roll according to the numbers. TSMC’s revenue for the third quarter rose 22% year-over year to $14.88 Billion. Third quarter net profit rose 20% to $5.614Billion. Single-quarter revenues and net profits both reached new heights. MediaTek leads the world’s smartphone systems on chip market share, for four straight quarters. This is a 17-point jump year-on year.

Although the semiconductor sector continues its growth, there is still a huge problem with the market. But Taiwan’s stock exchange makes it worth investing. In its late-year outlook report, HSBC Global Private Bank continued to believe that Taiwan will benefit from global growth in the semiconductor industry. He Weihua (North Asia investment director at HSBC Global Private Bank) pointed out the fact that certain semiconductor companies raised prices in 2021, and these benefits will reflect in 2022. The semiconductor market has many end markets including big data and AI. Financial technology and meta-universe are all areas that have potential for growth. Therefore, it is a good idea to be bullish about Taiwan stocks and semiconductors.

Prudential, a U.S. wealth management company, advised investors that they should buy stocks in the affected sectors, including textiles and travel. At the same time, the agency also mentioned that Taiwan stocks may drop in anticipation of the U.S. Fed’s interest rate hikes, though historically they recover to hit new highs after the hikes are made.

Summary: While the outlook for next year looks promising, there are increased risks

While the stock market outlook is favorable for these three Asian major markets, it is not impossible to deny that there are increasing risks.

The global pandemic is not over due to new mutant coronavirus strains. The pandemic, which will continue to be “swords of Damocles”, will hang over markets for the long-term. This uncertainty will affect global stock markets including Asian stocks.

Global central banks are already tightening their monetary policies, which could pose a risk to the stock markets this year. The Federal Reserve indicated that at least three interest rate rises were possible in 2022. Additionally, the Bank of England raised rates by 15 base points and the Norwegian central banks announced an increase. International “hot money”, which is international investment that has been poured into emerging markets like India, Vietnam and Taiwan, could be withdrawn, which will cause stock market returns decline.

In an interview with Xinhua, the American Enterprise Institute economist pointed out that rising expectations for interest rates in the U.S. have resulted in a slowdown in capital flows to emerging market countries. If the Fed increases interest rates quicker than markets expect, this will increase the flow of capital to the U.S. From emerging markets. Emerging economies will be facing serious problems.

Historically, in 2013, when the Federal Reserve began to scale back its asset purchase program it triggered a “taper tantrum” where Asian emerging market economies experienced capital outflows and currency devaluations. The future of history in 2022 remains to be determined.

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