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2023 was a year of divergence for investors in Asian markets, as Japan's benchmark index touched a 33-year high, Hong Kong rounded out its fourth straight year of decline and India emerged as a leader in IPOs, Nikkei reported.

One of the biggest drivers behind this divergence was disappointment in China's post-Covid recovery.

Hong Kong's flagship Hang Seng Index (HSI), which tracks 80 blue chip stocks, has dropped 13.8 per cent this year, its first four-year losing streak since its launch in 1969, Nikkei reported.

As investors shift away from greater China, their attention is moving to Japan, India and the tech hubs of Taiwan and South Korea. The major indexes in these markets rose by more than double digits in 2023, with Japan's Nikkei 225 leading the pack at nearly 30 per cent, Nikkei reported.

The comeback of Japanese shares was a result of multiple factors, including improved corporate governance, something the country's regulators have been working on for over a decade in hopes of stimulating investment from abroad.

BlackRock this month reaffirmed its "overweight" position on Japanese equities for the next six to 12 months. "The corporate reform that we are seeing in Japan has started to drive market performance, and we think that is going to continue," said Ben Powell, chief Asia Pacific investment strategist at BlackRock Investment Institute.

BlackRock is also positive about India. The South Asian country has become a place where investors park their funds as "China has been difficult as an equity market over the last 12 to 18 months and, quite naturally, investors are thinking, 'What else can we look at?'" Powell said, Nikkei reported.

The attraction of India goes beyond being a substitute for China, however. Powell's colleague, Thomas Taw, head of Asia-Pacific ETF investment strategy, said, "For investors that are looking for a long-term Asian growth story in the last year or so and many ahead, that is India at the moment."

The shift in equity market dynamics has been reflected in initial public offerings. Mumbai took the crown as the global leader in the number of IPOs in 2023, while Hong Kong slipped to sixth place, Nikkei reported.