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2024 Market Outlook: Time for a Bracing Breeze

Written by: Value Partners Group | Hong Kong

The global and regional macroeconomic and geopolitical factors which had significant influences on Asian assets in 2023, will continue to drive markets in 2024, but in different ways. We expect a gradual change of direction in the wind, with the tailwind that propelled some markets and assets in 2023 to fade, whilst the resistance from significant headwinds for others to reduce – resulting in some mean-reversion for 2024.

Key Investment Themes

1. Inflation and Monetary Policy – from headwind to tailwind for Asia

Globally, inflationary pressures have eased gradually, and the downward trend will likely continue into 2024. This change from monetary headwind to tailwind will likely be supportive of risk assets. We believe that Asia could benefit the most as this paves the way for stronger easing from central banks in the region, particularly for China.

2. Economic Growth – China’s recovery is delayed, not derailed

For 2024, it is critical to watch whether the government will implement further policy support for the ailing property market, particularly concrete measures directed towards easing the pressure on developers facing funding difficulties. We also expect to see more progress with the government’s comprehensive packages to resolve the ongoing local government debt issue, which has been another major market concern during the past year.

3. Divergence from Convergence – identifying the right sectors and strategies

We expect dividend equity-focused strategies to perform well in 2024. Globally, we believe that Asian equities remain mostly attractive from a valuation perspective. The convergence of economic growth in the region with the rest of the world could result in some mean-reversion on valuation, thus providing further impetus for Asian equity markets to deliver strong returns in the coming year.

4. Geopolitics – a continuing source of volatility

While there are a number of elections globally, the most notable is the US presidential election in the second half of 2024. Within Asia, there are also some important elections investors should watch out for, notably in Taiwan, Indonesia, South Korea and India. All of these could result in changes in policy direction, international relations, and the relationships between China and ASEAN and other North Asian countries.

This market outlook report covers our views across different asset classes and markets globally, as well as equities and fixed-income themes in Asia.

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