In a global economy, there are plenty of opportunities to invest outside of North America and Europe. Asia, in particular, offers a host of opportunities. Also, it is home to robust financial markets representing trillions of dollars. Any market that large is bound to offer some interesting investment opportunities. (Emerging markets like India are fast becoming engines for future growth. Find out how to get in on the ground floor. Check out The Indian Stock Market 101.)
TUTORIAL: The Forex Market

The regions of Asia are divided into developed and developing economies. The highly developed countries include Japan and the four countries often referred to as the Asian Tigers - Hong Kong, Singapore, South Korea and Taiwan. Major players among the other powerhouses include Russia, China, India and Malaysia. These other nations are major economic forces, but academics often debate whether or not they can be classified as "developed". Malaysia, for example, is a major source of scientific innovations, yet fails to be fully recognized as a developed nation.

Asia's Development
Historically, while the Asian markets have had stock exchanges for more than 100 years, they did not rise to prominence until after World War II. Japan set the pace with protectionist policies, and a strong central-government-led development effort that turned the country into an exporting powerhouse.

In time, its neighbors soon took notice of the trend. A host of other nations, including Hong Kong, Singapore, South Korea, Taiwan, Vietnam, Thailand, India and China, began a period of rapid industrialization in the early 1960s that continued through the 21st Century. These nations entered the global marketplace by exporting mass-produced products and then, over time, many of them evolved their efforts to enter the high-tech arena. With the injection of large amounts of foreign investment capital, the Asian Tiger economies grew substantially between the late 1980s and early- to mid-1990s.

Cross-industry growth continued until 1997 when Asia was struck with the financial crisis. The main cause of the Asian financial crisis was the collapse of the Thai baht which was ineffectively pegged to the U.S. dollar, as Thailand accumulated an excessive debt burden. Although many other regions such as China were less affected, Asia's economic growth experienced major setbacks. Since the late 1990s, these economies have recovered.

Korea is a prime example of a country that emerged from the turmoil to become a dominant player in international markets, as the country has become a technology powerhouse. With a high emphasis on education, South Korea is one of the world leaders in the robotics, biotechnology and aerospace research fields. China and India are following suite, as they work their way through the same development process. (Brazil is well positioned for future growth, and luckily for investors, it also has a very liberal investing climate. To learn more, see Investing In Brazil 101.)

Opportunity: How Investors Can Get In
The development of Asia and the cross-border flow of capital globally present a host of opportunities for investors. For investors who prefer to delegate research and trading responsibilities to professional money managers, there are numerous mutual funds and Asia-specific exchange-traded funds (ETFs) available. These funds run the gamut from regional to country specific, index trackers to sector-specific stock selectors and offer an inexpensive and easy way to benefit from diversification and professional management.

For those who prefer the do-it-yourself method, American Depository Receipts (ADRs) provided an excellent way to buy shares in a foreign company while realizing any dividends and capital gains in U.S. dollars. ADRs are negotiable certificates issued by a U.S. bank representing a specified number of shares (or one share) in a foreign stock that is traded on a U.S. exchange. For example, foreign firms listed on the New York Stock Exchange as ADRs give investors the opportunity to put their money into such internationally known brands as Honda (NYSE:HMC), Hitachi (NYSE:HIT), Mitsubishi (NYSE:MTU) and Sony (NYSE:SNE).

Different than Western Developed Markets
Asian financial markets, particularly within developing economies, are still generally less mature and less regulated than markets in America or Europe. Bond markets, in particular, are often underdeveloped, as bank financing is much more common than financing via the issuance of corporate debt. On the equity side, Asian markets are less likely to do the same type of capital restructuring that is common in America, with leveraged buyouts and similar maneuvers being exceptions rather than the rule. The wide variety of financial products available through retail banks is also more common in developed countries outside Asia.

Regulatory reforms in Asian financial markets also lag Western markets, and political factors can play a role, particularly in less developed economies where government intervention can be heavy. The operating differences and regulatory differences all serve as reminders of the need for investors to conduct research and give careful consideration to any investment before adding it to their portfolios.

Asian Flavor for Your Portfolio
At the end of 2010, the Asian economies were still booming. China, South Korea, Thailand, Indonesia and Malaysia are exporting powerhouses. Gross domestic product is rising in these nations and so are the investment opportunities. Double-digit stock market returns have left Western markets in the dust over the past decade, and investors are taking notice.

Investing is Asia provide access to a significant portion of the world's stock markets in a fast-growing, exciting region. Putting a portion of your portfolio in Asia can help fill your portfolio's allocation to international investments.

For additional insight into international investing, check out Does International Investing Really Offer Diversification? and Evaluating Country Risk For International Investing.

Related Articles
  1. Economics

    Long-Term Investing Impact of the Paris Attacks

    We share some insights on how the recent terrorist attacks in Paris could impact the economy and markets going forward.
  2. Stock Analysis

    An Introduction To The Indian Stock Market

    Most trading in the Indian stock market occurs through its two exchanges – the Bombay Stock Exchange and the National Stock Exchange.
  3. Savings

    How Americans Can Open a Bank Account In Thailand

    Have your paperwork in order and be sure to shop around.
  4. Chart Advisor

    Copper Continues Its Descent

    Copper prices have been under pressure lately and based on these charts it doesn't seem that it will reverse any time soon.
  5. Active Trading

    10 Steps To Building A Winning Trading Plan

    It's impossible to avoid disaster without trading rules - make sure you know how to devise them for yourself.
  6. Mutual Funds & ETFs

    Best 3 Vanguard Funds that Track the Top 500 Companies

    Discover the three Vanguard funds tracking the S&P 500 Index, and learn about the characteristics and historical statistics of these funds.
  7. Forex Fundamentals

    How to Buy Chinese Yuan

    Discover the different options that are available to investors who want to obtain exposure to the Chinese yuan, including ETFs and ETNs.
  8. Trading Strategies

    How to Trade In a Flat Market

    Reduce position size by 50% to 75% in a flat market.
  9. Markets

    Will Paris Attacks Undo the European Union Dream?

    Last Friday's attacks in Paris are transforming the migrant crisis into an EU security threat, which could undermine the European Union dream.
  10. Markets

    Are EM Stocks Finally Emerging?

    Many investors are looking at emerging market (EM) stocks and wonder if it’s time to step back in, while others wonder if we’ll see further declines.
  1. Is Malaysia a developed country?

    Despite undergoing rapid economic development over the past five decades, Malaysia is not considered a developed country, ... Read Full Answer >>
  2. How do mutual funds work in India?

    Mutual funds in India work in much the same way as mutual funds in the United States. Like their American counterparts, Indian ... Read Full Answer >>
  3. Do mutual funds have CUSIP numbers?

    The Committee on Uniform Securities Identification Procedures (CUSIP) number is a standardized identification system used ... Read Full Answer >>
  4. Is Mexico an emerging market economy?

    Mexico meets all the criteria of an emerging market economy. The country's gross domestic product, or GDP, per capita beats ... Read Full Answer >>
  5. What is a stock split? Why do stocks split?

    All publicly-traded companies have a set number of shares that are outstanding on the stock market. A stock split is a decision ... Read Full Answer >>
  6. How do I place an order to buy or sell shares?

    It is easy to get started buying and selling stocks, especially with the advancements in online trading since the turn of ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  2. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
  3. Quick Ratio

    The quick ratio is an indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet ...
  4. Black Tuesday

    October 29, 1929, when the DJIA fell 12% - one of the largest one-day drops in stock market history. More than 16 million ...
  5. Black Monday

    October 19, 1987, when the Dow Jones Industrial Average (DJIA) lost almost 22% in a single day. That event marked the beginning ...
  6. Monetary Policy

    Monetary policy is the actions of a central bank, currency board or other regulatory committee that determine the size and ...
Trading Center