Asia is the leading economic and industrial continent. And everything indicates that it will dominate even more during the twenty-first century. For those who want to invest in the region, we analyze the 10 most important stock market indices for Asia, and Asia-Pacific more broadly.
- MSCI AC Asia
- MSCI AC Asia ex Japan
- MSCI AC Asia Pacific
- MSCI AC Asia Pacific ex Japan
- FTSE Asia Pacific
- FTSE Developed Asia Pacific
- FTSE Emerging Asia Pacific
- S&P Pan Asian BMI
- S&P Asia Pacific
- S&P Asia 50
If there is one continent whose role in the world economy has increased dramatically since the middle of the twentieth century, there is no doubt that it is Asia. The growth that has taken place has been unprecedented. Some of the most notable examples include Japan, South Korea, China, Taiwan, Singapore, India and even countries such as Malaysia or Thailand.
Since then, Japan has grown from a country that lost the war in 1945 to one of the world’s largest economies. The same can be said of South Korea, which at that time was essentially a third world country. Or Singapore, which in just a few decades has managed to become one of the most prosperous places on the planet.
Regarding the more emerging economies, the growth and development that China has achieved since the late 1970s has been incredible. It is the single one event that has eradicated the most poverty throughout world history.
And the last decades have also seen how economies such as India, Malaysia, Thailand or the Philippines began to emerge, industrializing as well as developing their infrastructures and financial sector.
In addition to that, it is worth talking about the Asia-Pacific region, so that we can include countries in the Pacific area, such as Australia and New Zealand. Thus, we have two developed Western countries whose economies are very powerful, particularly in the natural resources space.
It is worth mentioning, however, that Gulf countries are not usually considered part of Asia when talking about stock market regions. Normally, these countries are considered their own region, especially those that are part of the GCC.
As a result of that, no one doubts that Asia, or Asia-Pacific more generally, will be the most important region for the world´s economy in the future. According to some metrics, it has already been for a long time. And while the United States remains the dominant superpower, Asia’s rise contrasts with the slow but clear decline Europe is experiencing.
For all these reasons, many investors are interested in investing in the region’s stock markets. Due to the multitude of countries and companies, as well as their heterogeneity, it is worth considering investing there through passive index funds.
Therefore, we will analyze the 10 most important stock market indices for the Asia and Asia-Pacific regions.
1) MSCI AC Asia
The MSCI AC Asia is a stock market index published by MSCI that includes all Asian countries considered developed or emerging. It is worth highlighting, therefore, that frontier markets are not included.
Therefore, the MSCI AC Asia has companies from Japan, which accounts for more than a third of the value of the entire index, China, which accounts for approximately 20% of it, Taiwan, South Korea, India and some other countries.
In total, almost 1,500 companies from about 11 different countries are represented. They are weighted according to their market capitalization adjusted for free float. Because of this, some of the most important corporations in the index are TSMC, Samsung, Tencent, Alibaba, Toyota or Sony. As you can see, there is quite a bit of diversity within the index.
For those who want to find additional information about the MSCI AC Asia, they can visit this link.
2) MSCI AC Asia ex Japan
Because Japan is the second largest stock market in the world, many investors prefer to manage their investments in Japan independently of their investments in other Asian countries. As a result, we have the MSCI AC Asia ex Japan index.
This index has the same composition as the MSCI AC Asia with the sole difference that it excludes all Japanese companies. The total number of stocks within the index drops to about 1,200.
In addition, China becomes the most important country within the index, with a capitalization that corresponds to roughly 33% of the total value of the index. Taiwan, India and South Korea enjoy weights that hover around 15-20%.
Obviously, the weighting of large non-Japanese companies is even higher in the MSCI AC Asia ex Japan. More information can be found on the MSCI website.
3) MSCI AC Asia Pacific
The MSCI AC Asia Pacific is an index that includes Asian and Pacific countries. That is, we now also have Australia and New Zealand. In fact, Australia is the third most important stock market within the index, behind only Japan and China.
Australia contributes several companies producing natural resources, especially industrial metals and precious metals, such as BHP. Hence, this index enjoys greater diversification.
Some 1,500 companies from 13 different countries can be found within the MSCI AC Asia Pacific. Therefore, this index can be a very good option for those who want to invest in the most important stocks in the region without having to look for individual funds for each country.
More information can be found on the MSCI website.
4) MSCI AC Asia Pacific ex Japan
MSCI also publishes a version of its stock index for countries in the Asia-Pacific region that excludes Japan, the most important stock market of all.
As a result, about one-third of the value of the previous index disappears, along with about 250 companies. That makes China the largest weighting within the index. And Australia represents about 16% of it.
In fact, we can expect to see 3 or 4 Australian companies among the top 10 stocks in the MSCI AC Asia Pacific ex Japan. And the combined weight of all natural resources and energy stocks increases to about 12-13%.
Here is the link to MSCI´s website in case you want to learn more details.
5) FTSE Asia Pacific
FTSE Russell publishes an index for the Asia-Pacific region that includes the most important listed companies from 14 different countries. We are referring to the FTSE Asia Pacific, which in total includes about 2,500 stocks.
Interestingly, the global index calculated by FTSE, the FSTE All-World, has just over 4,000 companies. Hence, approximately 60% of them are from countries in Asia or the Pacific. In terms of market capitalization, however, US companies continue to dominate within the global index, with Asia-Pacific accounting for about 20% only.
This also means that the minimum size necessary to join the FTSE Asia Pacific is smaller than in the MSCI AC Asia Pacific. As a result, the FSTE index makes it possible for us to invest in a greater number of smaller cap stocks.
The technology sector has the largest allocation within the index at about 25%. In terms of countries, Japan accounts for about 35% of the index, followed by China, Australia, India, Taiwan and South Korea.
You can find more information about this index on the FTSE Russell website.
6) FTSE Developed Asia Pacific
FTSE also publishes a stock index for the region that is only composed of those countries considered developed.
This means that the FSTE Developed Asia Pacific includes countries such as Japan, South Korea, Australia, New Zealand, Singapore and Hong Kong. Regarding the latter, it should be noted that we are talking about Hong Kong companies only, and not Chinese companies listed on the Hong Kong Stock Exchange.
This index may be of interest to investors who prefer to manage their investments in developed countries independently from how they manage their capital in emerging markets.
7) FTSE Emerging Asia Pacific
As it could not be otherwise, FTSE also publishes an index composed exclusively of emerging countries in the Asia-Pacific region. These are the ones that get excluded from the FTSE Developed Asia Pacific.
Within it, China is the dominant country. But Indian companies account for a very significant percentage of the market value of the index. Other emerging economies are also well represented, such as Taiwan, Malaysia, the Philippines and Thailand.
Some of its most important corporations are TSMC, Tencent, Alibaba, JD and Tata.
8) S&P Pan Asian BMI
S&P Dow Jones publishes one of the most inclusive stock indices for the Asia-Pacific region. It is the S&P Pan Asian BMI, which has countries in the Pacific region, although its name may seem to indicate otherwise.
Some 7,500 companies are represented within the index. This means that, although they are weighted according to their market capitalization adjusted for free float, with the largest ones dominating, it allows us to invest a greater percentage of our capital in small-cap companies.
Japan accounts for about 35% of the index and China 17%. Just behind them, at around 10% each, we find India, Australia, Taiwan and South Korea. The country with the smallest stock market that is included in the index is Pakistan.
If you are looking for more information about the S&P Pan Asian BMI, you will find it on its official website.
9) S&P Asia Pacific
S&P publishes another stock index for the region that is composed of countries considered developed only. Therefore, this index is very similar to the FTSE Developed Asia Pacific that we have analyzed previously.
Within the S&P Asia Pacific, a total of 6 countries are represented: Japan, Australia, South Korea, Hong Kong, Singapore and New Zealand. And it is important to note that Japanese companies together account for about 60% of the total value of the index.
As a consequence of that, this index does not have much diversification from a geographical perspective. Some of its most important corporations include Samsung, Toyota, BHP Group and Sony.
You can find more information about the S&P Asia Pacific under this link.
10) S&P Asia 50
Lastly, the S&P Asia 50 is a very interesting index. It is composed of 50 of the most important companies listed in 4 different countries: Hong Kong, Singapore, South Korea and Taiwan.
In this case, Chinese companies listed on the Hong Kong Stock Exchange can be part of the index. In fact, this means that 5 markets are represented, including China, which accounts for more than a third of the entire index.
However, it is important to note that all 5 territories are well represented. And that the technology sector is the most important one, with almost 40% of the index´s market capitalization, followed by financial and telecommunications companies.
Some of the most important corporations within the S&P Asia 50 are TSMC, Samsung, Alibaba, Tencent and the Hong Kong Stock Exchange.
All 50 companies in the S&P Asia 50 are part of the S&P Global 1200 global stock index.
You can find more information about this index on the S&P website.
I hope you found this article about the most important stock market indices for Asia and Asia-Pacific useful. And if you want to learn about the most important stock market indices in Europe, check out this link:
Top 8 Stock Market Indices in Europe
I also encourage you to subscribe to my newsletter: