Asia Pacific: Closed borders, porous markets


  • Other than India and Vietnam, not many equity markets have seen abnormal returns in 2021
  • Lot of major economies in the region have shut their borders to foreigners.
  • The reopening of borders is still shrouded in ambiguity.

The Asia-Pacific (APAC) region – the world’s largest economic bloc – has mostly been living in social isolation, with each country closing its borders to another in a bid to contain the COVID-19 pandemic. Despite this, the markets have been closely impacted by each other.

In Japan, the benchmark – Nikkei 225 – has rallied by paltry 9.52% -- one of the lowest in the region. The outbreak of the pandemic is having a big impact on tourism in Japan. The country's borders remain shut to international tourists, and there are no signs that the borders will be opened to considerable numbers of tourists in near future.

In China – the region’s largest economy – the markets have been more or less muted. The Shanghai Component has gained 5.93% on a year-to-date basis, while the Shenzhen Component is up 1.51%. The country is not open for tourism: only national citizens and foreign nationals with valid residence permits and some special types of visas are allowed to enter.

Australia’s benchmark ASX 200 has been among the better performers of the region. The index has rallied 13.91% so far in 2021. Australia has had one of the strictest restrictions and lockdowns in the world – for which, its government has received widespread condemnation. Its borders have been shut to the rest of the world for more than a year, while Australian residents are not permitted to leave the country.

According to a plan, Australia will have to vaccinate 80% of its adults against COVID-19 before it can consider reopening its border. Prime Minister Scott Morrison has announced a four-phase plan for greater freedom, including the gradual easing of local and state-wide travel restrictions based on vaccination rates. However, there’s no timeline for when Australia will reach each phase and it’s likely to depend on vaccine supplies and uptake, according to the federal government.