Data from Thomson Reuters shows how trading activity across Asia and Japan has cratered this year, dashing hopes among many investors and their sell-side brokers that the region would turn out to be a pot of gold.

Huge expectations for Asian GDP growth to translate into big investment flows and trading volumes have been the basis for the advent of many new brokers into the crowded field of Asian equities, from full-service providers such as Barclays Capital, BNP Paribas Securities, RBS and Standard Chartered, to niche and agency shops like Jefferies Securities and Sanford C. Bernstein.

It has also underlined the assumptions by ambitious regional players such as Daiwa Capital Markets, Mirae Securities, Mizuho Securities, Religare and Samsung Securities, all of which have set up expensive desks in Hong Kong and Singapore.

For the buy-side, there has been a similar hope that Asia would carry the load as the US and Europe continue to grapple with their big-picture struggles. The expectation by the end of 2010 was that global investors were headed to Asia and that Asia flows would pick up.

However, the data is now showing this hasn’t been the case. January and February were pretty active trading months, but the Arab Spring, the Japan earthquake, the apparent conclusion to America’s quantitative easing (with nothing to replace it), and renewed panic over eurozone problems has seen volumes and turnover in Asia and Japan splutter.

Brokers say they don’t see a catalyst to reviving trading activity in the region over the summer, although many are upbeat about autumn. A common refrain is that the macro outlook for investors today is about the same as it was a year ago, with major concerns over Europe and America; with Japan prostrate; and with soaring prices in real estate and commodities.

In fact, the current outlook is even spookier for investors, who must now also contend with a China slowdown as it tries to fight rising inflation without hitting the brakes too hard; and fears about spiking oil prices undermining the US recovery story.

As a result, investors are not putting all of their cash to work. It’s ‘risk-off’ right now and that is showing up in trading volumes.

For Asia ex-Japan, the entire year has been a disappointment. According to Thomson Reuters, Asia-Pacific monthly market turnover peaked in November 2010 at $2.3 trillion. By December it had fallen to a little under $1.75 trillion, to under $1.15 trillion in January and just over $1.5 trillion in February.

The Japan earthquake in March saw regional turnover spike to $2.29 trillion. (Great for brokers – not so great for investors.) But in April, activity fell back to under $1.73 trillion, and plummeted to $1.48 trillion in May.

For a feel of what’s happened so far this year, Thomson Reuters breaks out data on trading the benchmark Nikkei 225. For all trades conducted in Tokyo, including auction order book (the vast majority of trading) plus non-auction order books (alternative venues such as Chi-X Japan, SBI Japannet and Instinet Japan), and OTC deals, total turnover spiked in March to ¥34.5 trillion ($430 billion). Volumes hit 51 billion shares. By May it had fallen to ¥18.8 trillion, with 27 billion shares changing hands.

This is well below what had already been a pretty ho-hum January and February, and the pattern is replicated across the region, albeit less dramatically: March spike, with April and May exhibiting less activity than January and February.

The exceptions: Indonesia and the Philippines (and to a lesser extent, Thailand), where trading volumes seem to be on the rise.

In January, Indonesia total volumes were 80 million shares (7.3% of the region’s total). In March, activity had actually declined to 75 million shares traded, and April sustained this level. But May saw Indonesia volume hit 130 million shares traded, or 11.3% of regional totals, behind only Hong Kong and Shanghai, and above Shenzhen.

The Philippines has witnessed a similar trend, with that market rising from 2.5% of the region’s total volumes in March to 10.2% in May.