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“It was the beginning of the end,” says David S. Laskin, a professor at Cornell University’s department of management and economics who has studied the emergence of the Asian market.
“The Japanese market went up and down for a decade, then it went down again, then up again.”
Lasken says there was no market in Asia prior to the 1970s, and he is not certain how it came to be known as the Asian Stock Market.
“You know what happened?
It was the invention of the word ‘Asian,’ so that’s how it was called,” he says.
“It didn’t really have anything to do with anything other than what we’re used to.”
Market analysts say the name Asian Stock Exchange, or ASX, was a nod to the Japanese and Korean markets, and was used by the Asian investors and traders to refer to the entire region.
The Japanese market, in particular, had suffered from decades of mismanagement, and the market was a key source of capital for companies like Honda, which closed down in 2006.
“This was a really bad time for Japanese stocks,” says Paul Toth, a senior research fellow at the University of Sydney’s business school.
“They were underperforming in many ways and they were undervalued in many other ways.”
Largest stock in the world?
Laskis believes the name was born from the fact that the Asian stocks were smaller than those of other parts of the world.
“A lot of people would say the Chinese stock market is the biggest, but I think the market of Singapore, Taiwan, Hong Kong and Japan are smaller,” he explains.
“But the Asian markets are not as small as they used to be.”
Sometime in the 1970, Japan had a boom period.
The stock market started to rise and go through the roof.
But by the late 1980s, the market had been suffering from an enormous stock market bubble.
The bubble, in turn, created massive pressure on the Japanese economy.
In the 1990s, there were about 300 million people in Japan, and many were living below the poverty line.
Sixty percent of Japanese people were living in poverty, according to a 2013 survey by the Japan Development Research Institute.
There were a lot of job losses.
“Japan was a very different economy when the bubble burst,” says S.T. Chan, a University of Toronto professor of business and economics.
“And the Japanese people felt like they were losing their livelihoods.”
Chan says the Asian population was a lot smaller in the late 1990s.
“There were a couple of million fewer people than there were now in Japan,” he adds.
“That’s the kind of economic impact that the economy had.”
In 2008, Japan started to see a real recession, and it was a time of intense political pressure on Prime Minister Shinzo Abe, who took office in December 2007.
“He had just been elected, and suddenly he had the biggest mandate of any prime minister in Japan history,” says Chan.
“So people started to think: what do we do now?
And the biggest thing that Abe said was: let’s not have a big stock market, let’s just have a small market.”
Japan’s economy went into recession.
By 2010, the Asian share of global trade had shrunk from 10 per cent to 4 per cent.
In 2011, Abe won re-election and launched a major policy overhaul, which involved raising the retirement age to 67 from 65.
The reform included the creation of a new pension fund, which the government used to pay off old debt, and a reduction in the tax rate on stocks and bonds.
The economy also suffered from massive tax hikes, including a 30 per cent tax on the first $10 million of net assets, a 25 per cent rate on investment income and a 15 per cent on net profits.
Chan says Abe’s policies were an important part of the Japanese economic recovery.
“At the time, the economy was growing, and they had done it in a very aggressive way,” he continues.
“People were very optimistic that the reforms would boost growth, and that it would bring about a revival of growth.
But it didn’t happen.”
“After the reform, things started to fall apart, because the government didn’t have the capacity to pay the debts that it was creating,” he recalls.
“What happened was that they created new debts that they couldn’t pay off.”
Likening the Asian Market to the American Stock Market According to Laskins, the “Asian Stock Market” was a misnomer.
“We’re really seeing an Asian-American stock market,” he told CBC News.
“I would argue that the term is really misleading because the American market is not an Asian market.”
In a recent article for the Journal of Business Ethics, S.K. Srinivasan, an economist at the Institute of International Finance, argues that the American stock market has been unfairly compared to the Asian one. “Americans