Macroscope | Why stock markets must stop acting like casinos, especially in Asia

With big wins for a few and not much for the rest, stock markets are attracting massive funds from the economy but meeting none of its real needs

These range from SME support and supply chain repair, to climate mitigation and infrastructure building

Reading Time:3 minutes

Traders work on the floor of the New York Stock Exchange on June 13. Markets need to change their perspective, and a bear market may force such a change. Photo: AP

Published: 10:15am, 4 Jul 2022

Stock markets – as John Meynard Keynes, Warren Buffett and others have remarked – are like casinos. It is often a winner-takes-all game where a few become rich and powerful while others do not even get a seat at the table.

These “others” are often the legions of small and medium-sized enterprises (SMEs) which, in contrast to the flashy tech titans and entrepreneurs of Wall Street, provide by far the largest share of employment, output and productivity in corporate Asia and beyond.

This is an indictment of so-called Anglo-Saxon capitalism, which has developed systems and structures capable of collecting huge savings beyond the purview of governments and banks, but not directing them efficiently into the broad base of business and industry.

Two recent events highlight the anomalies of this situation. One was a panel discussion that I moderated recently on the state of small enterprises in Asia. And the other was the publication of the “Corporate Finance in Asia and the Covid-19 Crisis” report by the Organisation for Economic Cooperation and Development (OECD).

In the West, financial markets have become “tech-obsessed”, not only in the absurdly high valuations afforded to a few high-flying, high-profile and financially very powerful tech entrepreneurs (until very recently at least) but also in the cult of hi-tech start-ups.

Start-ups, as economic commentator and university professor Richard Katz said, are associated with “geeky” young entrepreneurs in Silicon Valley dreaming up new artificial intelligence or cryptocurrency innovations to be financed by venture capital companies.

Macroscope | Why stock markets must stop acting like casinos, especially in Asia

With big wins for a few and not much for the rest, stock markets are attracting massive funds from the economy but meeting none of its real needs These range from SME support and supply chain repair, to climate mitigation and infrastructure building

With big wins for a few and not much for the rest, stock markets are attracting massive funds from the economy but meeting none of its real needs

These range from SME support and supply chain repair, to climate mitigation and infrastructure building