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Asia’s financial markets are at a critical juncture, shaped by a confluence of factors ranging from geopolitical shifts to economic dynamics. Will the region continue to shine in 2024? Here are some expert opinions on the Asia Outlook 2024.
Asia Economy
“Asia is expected to account for 60% of global GDP growth in 2024—higher than the pre-pandemic average. Despite higher risk attached to geopolitics and China’s economy, it will remain the main region for growth opportunities,” says the Economist Intelligence Unit (EIU).
EIU opines that Bangladesh, Indonesia, Vietnam, Malaysia, and, to a certain extent, the Philippines are anticipated to experience accelerated growth in the medium term. These countries are expected to gradually approach the GDP per capita levels observed in developed Asian economies like Japan, Singapore, and South Korea.
“Growth in developing Asia is forecast at 4.8% this year and in 2024, up from 4.2% last year. The People’s Republic of China’s (PRC) recovery and healthy domestic demand in India will be the region’s main growth supports this year and next,” says the Asian Development Bank.
Meanwhile, S&P Global talks about inflation and the monetary policy scenario in the Asia Pacific. “With core inflation continuing to ease, the region’s central banks are unlikely to have to tighten monetary policy again. Still, given the pressure from higher-for-longer U.S. interest rates, we expect no meaningful falls in policy rates for the next six months,” writes the rating agency.
Asia Equity
Anticipated to play a pivotal role in driving global economic growth in 2024, Asia’s outlook sparks considerable enthusiasm regarding the potential prospects in the continent’s stock markets for the coming year.
“Asia’s continued strong growth momentum and relatively promising outlook should provide attractive potential for selective equity investors in 2024,” writes Elizabeth Soon, Head of Asia ex-Japan Equities at PineBridge Investments.
“Disruptive technological innovation is a key theme within which investors can expect to find rewarding and untapped opportunities in those companies well-placed to benefit from the transformations underway,” she adds. Soon also argues that investors will find small-cap companies particularly attractive.
Separately, Jupiter Asset Management expects a two-way pull for stock markets in the Asia Pacific. “The prospect of looser monetary policy globally may allow for P/E expansion and higher prices; meanwhile, many businesses could struggle to prevent their earnings declining if we see weak economic growth and rising unemployment in key markets, such as the US,” says Jason Pidcock, Investment Manager, Asian Equity Income at Jupiter.
Nevertheless, Pidcock anticipates an upswing in earnings and dividends within the technology sector. Additionally, he asserts that infrastructure, property, and telecom stocks should experience a degree of relief due to a halt in the ascent of interest rates.
“Asian earnings remain highly correlated with export growth. Despite the challenging backdrop for exports in 2023, green shoots of recovery have emerged in Asian exports that should provide a foundation for earnings growth in 2024. Moreover, Asian economies with strong local demand, solid tourism recovery and ability to capitalise on AI demand could bolster earnings growth,” opines Marcella Chow, Global Market Strategist at JPMorgan Asset Management.
Asia Bonds
Faced with a positive Asia outlook for the economy and stock markets, asset managers are equally optimistic about the prospects of the region’s fixed-income sector in 2024. Invesco sheds light on Asia investment-grade bonds and how they are expected to perform next year.
“In 2023, Asia HY bond supply remained low at less than $5 bn in issues outstanding and less than 10 primary transactions. Going into 2024, the value of bonds maturing is expected to increase, and we anticipate more than double the amount of issuance in Asia HY relative to 2023,” writes Norbert Ling, ESG Credit Portfolio Manager at Invesco Fixed Income.
Besides, Eastspring Investments talks about the prospects of investing in Asian local currency bonds. “Asian local currency bond yields exhibit good value at current levels and present an attractive entry point for investors looking to position themselves for the start of the rate-cutting cycle…Meanwhile, low beta markets such as Thailand and Malaysia are likely to be more resilient if bond volatility rises,” says the asset manager.
Among other asset managers, Allianz Global Investors identifies significant opportunities in Asian fixed income outside of China. “…which we think can offer an antidote to the anticipated global slowdown and broader market volatility,” asserts the asset manager. Regarding investment-grade corporate bonds in Asia, Allianz GI suggests that they present a competitive risk-reward profile when compared to other credit markets worldwide.
