In 2024, the Asian stock market is likely to continue to grow strongly, bringing promising potential to investors. With the economic situation forecast to grow positively, countries in the region will attract investment capital and stimulate the development of the stock market. Support measures from the government and improved export prospects will be important drivers for the recovery of the Asian stock market. Infrastructure, real estate and technology sectors are expected to be bright spots next year.
1. Asian Stock Market Situation in 2023
In 2023, market proof Asian stocks has undergone a series of significant fluctuations. Rising inflation, rising interest rates and the slow recovery of the Chinese economy have put significant pressure on this market.
Japan's Nikkei 225 has led the region's stock market performance in 2023, rising about 28% from the previous year, according to data from Refinitiv. The growth was supported by improved corporate earnings from Japanese companies. In particular, optimism that the Bank of Japan (BOJ) may be about to end its ultra-loose monetary policy after years of near-zero interest rates has provided a positive boost to Japanese stocks.
Meanwhile, Hang Seng Index Hong Kong's index was the worst performer in the region, falling nearly 14% in 2023, also the fourth consecutive year of decline.
Then, CSI 300 index China’s stock market – which includes the largest companies listed in Shanghai and Shenzhen – was the third-worst performing in Asia, falling 11,38% last year.
China’s reopening has been sluggish due to a real estate slowdown and local government debt problems, which have hurt spending and reduced demand and investment in the manufacturing sector, said Peggy Mak, head of research at PhilipCapital.
Still, Asia’s outlook remains bright in 2024, according to analysts from Pinebridge Investments. With continued strong growth momentum from Asia, as well as “a relatively promising outlook,” these should provide attractive potential for equity investors in 2024.
The International Monetary Fund (IMF) projects Asia's growth rate at 4.6% in 2023 and 4.2% in 2024, higher than the global growth forecast of 3% in 2023 and 2.9% in 2024.
2. Policy changes in 2024 in Asia
After 2023, here's what investors are looking for in 2024.
Investors focus on interest rate cuts:
- The US Federal Reserve (Fed) has announced plans to cut interest rates, expected to reduce 75 basis points in 2024 and 100 basis points in 2025.
- Central banks in Asia and around the world are influenced by the Fed.
- In Asia, interest rate hikes have slowed, although some central banks still warn of inflation.
- Southeast Asia kept interest rates steady, except for a few like the Philippine Central Bank.
- The Bank of Japan's move toward negative interest rates is being closely watched.
- Inflation in Japan has exceeded 2% for 19 months. Homin Lee of Lombard Odier predicts the BOJ will raise interest rates to 0% in 2024 and gradually end the 1% cap on 10-year Japanese government bonds.
As inflation eases and interest rates fall, sectors that benefit from it, such as infrastructure and real estate, will flourish. This will also benefit the energy and commodities sectors, as well as those driving the AI revolution. In particular, the potential for growth in the global technology cycle is taking shape, and markets such as Taiwan (China), Vietnam and Singapore could thrive thanks to their focus on manufacturing and R&D.
Vietnam, Singapore and Malaysia – manufacturing hubs often tapped to reduce reliance on China – are now shifting production to non-Chinese markets, making them less vulnerable to a slowdown in the Chinese economy.
In addition, the expectation of a “potential turnaround” for China’s stock market in 2024, after a difficult year in 2023, refers to a modest recovery in the world’s second-largest economy. This recovery is supported by measures from the central government and an improving export outlook. At the same time, the forecast suggests that a recovery in the global technology sector could contribute to China’s improved exports.
Politics and election events:
- The development of political developments will be carefully monitored.
- Elections in India and the US are poised to create “significant changes in the economic and diplomatic landscape of the Asia-Pacific (APAC) region”.
- “The market is witnessing increasing uncertainty and anxiety, fueled by the rapidly changing international situation and the critical point in China-US relations, which makes it more difficult to gain confidence from global investors,” analyst Hebe Chen stressed.
- If former President Donald Trump returns to the White House, investor confidence could be dented and the stock market could be hit by uncertainty over US trade policy and fiscal spending.
3. Forecast on growth prospects of Asian stock market in 2024
On the market stock continent Ah, trading sessions took place in a cautious spirit, especially when the semiconductor group of stocks was facing pressure from the decision to downgrade the credit rating of technology company Apple by Barclays. Korean Securities recorded the sharpest decline, up to 1,78%, while both the Australian and Chinese markets were under downward pressure.
However, despite the difficult start, investors remain optimistic about the outlook. stock market in asia in the new year 2024. According to CNBC, the economy's strong growth prospects will be an important driving force behind the strong push of Asian stock index in 2024. The International Monetary Fund (IMF) forecasts that the regional economy will grow by 4.21% yoy, higher than the global economy's 2.91% yoy. In addition, the expected interest rate cut from the US Federal Reserve (FED) is also a positive factor for investors.
Regional markets are also expecting notable changes. In Japan, the Bank of Japan (BOJ) is expected to abandon its negative interest rate policy, while in South Korea, the government is trying to scrap a new tax mechanism to boost investment in the stock market.
“Despite the fact that Korea has many globally competitive corporations, its stock market is undervalued. During my term, I will boldly remove regulations that do not meet global standards and raise the value of the Korean stock market,” President Yoon Suk-yeol said.
The region's leading markets such as Japan and India are expected to head towards new records. At the same time, after a disappointing year, the market Chinese stock market could also provide new bright spots. About a third of investors surveyed by Bloomberg said they would increase their exposure to China in the next 12 months: “Entering 2024, China’s stock market could face potential changes thanks to a more positive economic outlook. A mild recovery in the economy is forecast, supported by government policy measures and an improving export outlook.”
Source: Onstock
