Asian Markets: Wear Traditional Garb or Go with a Power Suit?

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Asian Markets: Wear Traditional Garb or Go with a Power Suit?
The markets in Bali and Japan are drastically different -- and so are the clothes

By Nathaniel Williams
Thu, 22 Dec 2011 13:30:00 ET

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When it comes to clothes, my chief concern is thriftiness, not style, so I still wear some 10-year-old shirts. Needless to say, I often consult my wife about my attire before I walk out the door in the mornings.

But it would be wise for me to learn more about fashion. Not to catch up with the latest trends, but to understand the markets better.

What does fashion have to do with stock markets? The December 2011 Asian-Pacific Financial Forecast dives headfirst into the topic with a recent example from Asia. Here's a sample (emphasis added):

When hosting the Asia-Pacific Economic Cooperation (APEC) annual meeting last year, developed-market Japan broke the tradition of requiring visiting national lenders to wear traditional costumes of the host country. The United States this year maintained the standard of wearing suits rather than traditional garb at the meeting in Hawaii in early November. President Obama explained that, given the economic climate in the United Sates, "I got rid of the Hawaiian shirts because I had looked at pictures of some of the previous APEC meetings and ... I thought this may be a tradition that we want to break." (AFP)

But at the East Asian Summit held on the resort island of Bali a week later, host Indonesia, whose stock market is up more than fivefold since late 1999, had no such reservations. The attending leaders showed up dressed in shirts made of colorful traditional Indonesian fabrics and dyes. "Diplomatic 'silly shirt' parade revived in Bali," reported the Associated Foreign Press.

What's behind the sharp contrast in the clothing worn by leaders at the Japanese and Bali meetings? Socionomics, the study of social mood, provides a clue. It posits that the same social mood that governs stock prices ALSO drives cultural trends -- like fashion.

As a result, bull markets tend to produce "flamboyant individuality" in fashions, while bear markets generate "conservative dress," as Robert Prechter observed in his landmark "Popular Culture and the Stock Market." You can see this principle in action in Bali and Japan.

Yet here's the most important question: What do these fashion differences suggest for the future of Asian markets? The December Asian-Pacific Financial Forecast uses socionomic analysis to answer that question in a way that might surprise you -- along with specific forecasts for every major Asian-Pacific market.

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Tags: Bear market, bull market, social mood

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