China also gets singled out as the "intriguing" case where the wealth effect is "statistically insignificant" despite having the world's best performing index, it said.  In addition to slowing wage increases, the stock market's relatively low proportional comparison with China's gross domestic product (GDP) also undermines the positive lift from stronger equities, HSBC added. China's market capitalization represents nearly 90 percent of the country's GDP, ranking the mainland 7th place among emerging Asian peers.  Meanwhile, the run-up in mainland stocks could lead to a "crowding-out" of the wealth effect, HSBC said.  "Rising stocks increase expectations of future returns, which induce residents to substitute consumption with more investments. This behavior reduces households' immediate consumption and is prominent in China where investment channels are still limited," the report added.  Another factor mitigating the wealth effect in China is a low domestic participation rate in the equity market, even though data from the China Securities Depository and Clearing Co. revealed a 433 percent on-year jump in new trading accounts over the first three months of 2015.  "There have been millions of new accounts opened so it seems that it is not just the super-rich that are taking part, but I suppose the question to ask is whether [this] captures the amount of capital gains that people are spending," Richard Jerram, chief economist at Bank of Singapore, told CNBC.  "If there is roughly 15 trillion yuan of capital gains over the past year, and you assume 5 percent of the gains are spent – a fairly common rule of thumb – then that amounts to less than 1 trillion yuan in a 63 trillion yuan economy. Potentially significant, but maybe hard to see," he added.
Emerging Asia may be enjoying a bull run in stocks, but the region may miss out on the "wealth effect," analysts said.