Nvidia chips are displayed at Computex in Taipei, Taiwan, on May 29, 2023.
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Asia-Pacific stocks performed well in 2024, with most major markets ending the year higher as the region’s central banks eased monetary policy and a boom in artificial intelligence boosted technology stocks.
Taiwanese tex As of December 23, the Hong Kong stock market rose 28.85%, leading the region’s stock markets. Hang Seng Index Ranked second with 16.63%.
Asian success Inflation is falling faster than the rest of the worldMike Shiao, chief investment officer of Asia ex-Japan at investment management company Invesco, said this paves the way for monetary easing.
“As the Federal Reserve has now begun its easing cycle, Asian countries will have more room to cut interest rates in 2025,” he said in a report. Loose monetary policy tends to boost stock markets.
Market focus on technology and tech-related stocks helped lift the Taiwan Exchange. heavyweight British Semiconductor Soaring 82.12% in 2024, Apple’s main supplier Foxconn – trading at Hon Hai Precision Industry An improvement of 77.51%.
Although Demand for AI data centers and servers may slow Demand for AI-powered phones, PCs and other consumer electronics is likely to increase in 2025 after strong growth this year, DBS Bank’s outlook report said.
DBS Bank pointed out that the global semiconductor industry usually experiences an expansion cycle that lasts about 30 months. The current cycle begins in September 2023 and is likely to extend until the end of 2025.
While tech stocks helped boost Taiwan, they couldn’t save South Korea, the only major Asian market to end the year in negative territory. The country’s “Enterprise Value Enhancement Plan” appears to have failed to boost stocks amid tariff concerns and Political turmoil increases uncertainty.
national benchmark Cospi As of December 23, the stock fell 8.03%, becoming the worst performing market in Asia.
Paul Kim, head of equities at Eastspring Investments, said in the company’s 2025 outlook that major economies, especially the United States and China, will greatly affect South Korea’s export-driven economy.
“Major exporters such as IT hardware and automobile manufacturers may face challenges,” he added.
The impeachment of President Yoon Suk Yeol will undoubtedly put pressure on investors, with Lorraine Tan, director of Asia equity research at Morningstar, telling CNBC earlier this year that “a leadership change is needed.” The longer it takes, the more likely investors are to be marginalized.
Kim also said the government would play a key role in the country’s market, stressing that potential reforms to corporate regulations, fiscal stimulus measures and the possibility of further interest rate cuts by the Bank of Korea could help improve the business environment and stimulate domestic demand.
Looking forward to 2025
The two main areas that will dominate investors’ thinking in 2025 will be Donald Trump’s presidency and the Chinese economy, said George Maris, chief investment officer and head of global equities at Principal Asset Management situation.
Nomura Securities says policies from the incoming Trump administration could boost Asia’s growth and inflation prospects in 2025. “We expect tariffs to rise early next year, which will lead to higher inflation and slower investment growth.”
Nomura Securities said higher tariffs and trade barriers would mean weaker exports from Asia. Increased uncertainty and tit-for-tat retaliation could delay business investment in the region.
Freida Tay, institutional fixed income portfolio manager at global investment management firm MFS Investment, said manufacturing and trade-reliant economies, such as those in Asia, are likely to be more negatively affected “as tariffs reduce trade flows and have an impact on Economic growth is creating downward pressure,” management told CNBC.
Nomura predicts Asia will also have to contend with tighter global financial conditions in 2025 due to rising interest rates and a stronger dollar.
At the last meeting of the Federal Reserve in 2024 Suggests interest rate cuts will be smaller In 2025, the inflation forecast is also raised.
Nomura Securities believes that “monetary policy prospects are divergent” in the region and said that countries with greater foreign exchange risks such as China, Australia, South Korea and Indonesia will loosen monetary policy in 2025.
Loose monetary policy typically weakens a country’s currency, making exports cheaper and potentially supporting economic growth in the face of tariffs.
On the other hand, countries with “strong growth, higher inflation and still loose monetary conditions” will raise interest rates, such as Japan and Malaysia.
Overall, there is a lot of uncertainty surrounding 2025, experts say.
Nomura analysts wrote that the region “will see turmoil ahead,” noting that while strong AI demand and export front-loading should provide some growth support in the first quarter, the region “appears to be turbulent” from the second quarter onwards. It’s heading for rougher seas” because of the impact of the Trump presidency, overcapacity in China and a slowdown in the semiconductor cycle.
However, the company believes that growth performance in Asian economies with stronger domestic demand buffers, such as Malaysia and the Philippines, is better than that of India, Thailand and South Korea, which may face headwinds.
China: challenges and opportunities
China’s economic conditions will also become a key area of ​​focus for Asian investors, Maris said, with traders looking at Asia’s second-largest economy for its “meaningful commitment to sustainable growth.”
In 2024, as Beijing focused on boosting the economy, China’s stock market broke a three-year losing streak, with the CSI 300 Index rising by 14.64%.
Nomura analysts expect China to roll out more stimulus measures to support the economy, while emphasizing the need for Beijing to stabilize its troubled property market, repair its fiscal system, strengthen social welfare support and ease geopolitical tensions to “achieve real, sustainable economic growth.” “Resuscitation”.
“This is a tall order as China’s exports – the single largest contributor to growth in 2024 – are likely to face strong headwinds from Trump’s return. Although Beijing is likely to insist on GDP growth of “around 5%” target, but we expect growth to slow. Nomura said this number will increase from 4.8% in 2024 to 4.0% in 2025.
Maris sees opportunity in the world’s second-largest economy. He has a “constructive” attitude towards companies reaching out to Chinese consumers.
He said the companies often trade at attractive valuations “given the dominance of negative sentiment” but could benefit from improved demand if government stimulus comes in.
