Investors are bullish on Asia in 2024. Here’s what to look out for

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A screen displays the Nikkei 225 Stock Average figure at the Tokyo Stock Exchange (TSE), operated by Japan Exchange Group Inc. (JPX), in Tokyo, Japan, on Monday, Oct. 30, 2023. The expansion of Israel’s ground operations in Gaza added more pressure to global markets as investors prepare for a busy week packed with major central bank decisions and a high-stakes announcement of US bond sales. Photographer: Akio Kon/Bloomberg via Getty Images

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Asia markets saw a volatile year in 2023, with inflation, rising interest rates and China’s sputtering recovery dragging down growth last year.

Japan’s Nikkei 225 led the region in terms of market performance in 2023, and gained about 28% last year, according to data from Refinitiv. Japanese stocks have been supported by improving corporate results, as well as growing optimism that the Bank of Japan may finally end its ultra easy monetary policy after decades of near-zero interest rates.

On the other hand, Hong Kong’s Hang Seng Index was the worst major performer in the region, having had four straight years of declines after losing nearly 14% in 2023.

Highlighting China’s underwhelming recovery is also the performance of the CSI 300, which measures the largest companies listed in Shanghai and Shenzhen, was the third worst performing stock market in Asia, losing 11.38% last year.

China’s post-reopening was “dismal” due to a property downturn and local government debt issues, which hurt spending and dampened demand and investment in the manufacturing sector, PhilipCapital’s research manager Peggy Mak told CNBC.

Despite this, the outlook for Asia is still bright, according to analysts from Pinebridge Investments.

They see continued strong growth momentum from Asia, as well as a “relatively promising outlook,” which they say should provide attractive potential for selective equity investors in 2024.

“Asia’s two biggest economies cannot be overlooked. While China requires a patient, company-specific investment focus as the economy gradually stabilizes, India is surging ahead across multiple sectors – assuming investors keep an eye on heady valuations.”

Their view is supported by the International Monetary Fund, which expects a growth rate of of 4.6% in 2023 and 4.2% in 2024 for Asia, compared to a global growth forecast of 3% in 2023 and 2.9% in 2024. This is according to Krishna Srinivasan, the IMF’s director for the Asia and Pacific region.

“Surprises abounded in 2023, from China’s underwhelming post-Covid recovery to the strength of the U.S. economy, the promise of artificial intelligence, and a no show global recession,” said Michael Strobaek, chief investment officer at Lombard Odier, in his 2024 market outlook.

Beyond 2023, here’s what investors are looking for in 2024.

Lower rates

Data is 'not so convincing' on when to cut rates: Philippine central bank chief

Pockets of growth

Goldman Sachs: expect Bank of Japan to raise rates and abandon yield curve control in October 2024

Geopolitics and elections

U.S.-Taiwan relations will remain very strong, says professor



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