Looking to ride the Asia-Pacific rally? Here are analysts’ top markets to invest in 2024

Asia-Pacific
markets
rose
to
new
highs
in
2023,
with
Japan’s


Nikkei
225
emerging
as
the
top-performing
equity
index.
The
region
is
expected
to
continue
its
good
run
into
the
next
year
as
well.

So,
which
markets
will
outperform
in
2024?

According
to
analysts
that
spoke
to
CNBC,
Asia-Pacific’s
top-performing
markets
in
the
first
half
of
2024
will
be
India,
Japan
and
Vietnam
—
here’s
why.

India’s
stock
market
emerged
as
one
of
the
region’s
favorite
last
year
and
investors
are
bullish
on
the
country’s
long-term
prospects.

The
benchmark


Nifty
50
index
gained
20%
in
2023,
and
hit
a
string
of
record-highs.

India’s
economic
growth
is
expected
to
outpace
other
major
Asian
economies
in
2024,
with
the
International
Monetary
Fund
projecting
the
country’s
real
GDP

to
expand
by
6.3%
this
year,
the
same
rate
as
is
expected
for
2023.

India’s
growth
prospects
have
been
a
powerful
driver
for
its
stocks
at
a
time
when
its
neighbor
and
the
region’s
biggest
economy,
China,
was
seen

struggling
to
meet
its
target
of
5%
GDP
growth
for
2023.

Indian
stock
markets
have
also

benefitted
from
strong
earnings,
imminent
interest
rate
cuts
and

greater
participation
from
domestic
investors.
All
of
which
are
expected
to
carry
the
Nifty
50’s
record
rally
into
the
next
year.

The
wildcard
for
2024
will
be
the
country’s
general
elections.
Strategists
from
J.P.
Morgan
said
in
a
note
that
they
see
the
Nifty
50
hitting
25,000
next
year,
if
the
ruling
nationalist
Bharatiya
Janata
Party
retains
power.

The
target
of
25,000
represents
a
more
than
15%
upside
from
the
index’s
last
close
of
21,710.

However,
JPM
warned
that
“if
the
general
election
results
are
unexpected,
along
with
a
global
recession,
geopolitical
tensions,
higher
oil
prices,
or
higher
domestic
unemployment,”
the
Nifty
could
fall
to
16,000.

Japan’s


Nikkei
225
was
the
top
performing
stock
index
in
Asia
last
year,
and
analysts
believe
the
country’s
equity
markets
have
more
room
to
run
in
2024.

The
rally
in
Japan
stocks
saw
the
the
blue-chip
Nikkei
225
gaining
28%
last
year
and
the
broader
Topix
ending
25%
higher.

Japanese
stocks
were
boosted
by
strong
earnings
and
growing
hopes

that
the
Bank
of
Japan
may
finally
end
its
ultra
easy
monetary
policy
after
decades
of
near-zero
interest
rates.

Masashi
Akutsu,
a
strategist
at
BofA
Global
Research
said
he
expects
the
rally
in
Japan
markets
to
continue
well
into
2024,
also
noting
a
rise
in
foreign
investments.

Strategists
at
BofA
see
the
Nikkei
225
touching
37,500
by
the
end
of
2024.
The
index
currently
trades
at
around
33,464.17.

Akutsu
said
technology
and
banks
were
BofA’s
top
picks
for
next
year,
as
the
sectors
balance
out
a
portfolio
with
both
growth
and
value-focused
stocks,
at
a
time
when
markets
expect
the
Bank
of
Japan
to
end
its
ultra-loose
monetary
policy.

The
BOJ’s
wrapped
up
its
final
meeting
of
2023
leaving
interest
rates

within
the
negative
territory
at
-0.1%,
while
sticking
to
its
yield
curve
control
policy
that
keeps
the
upper
limit
for
10-year
Japanese
government
bond
yield
at
1%
as
a
reference.

A
slowing
economy
and
cooling
inflation,
however,
could
pose
as
a
potential
challenge
for
the
BOJ
when
it
comes
to
unwinding
its
ultra-easy
stance.
Investors
will
also
keenly
await
the
annual
spring
wage
negotiations
next
year
to
confirm
a
trend
of
any
meaningful
increases
to
wages.

Just
like
India
and
Japan,
Vietnam
has
benefited
from
the
“China
plus
one”
strategy
with
companies
diversifying
investments
to
help
reduce
their
reliance
on
China.

The
country
expects
to
see
a
6%
to
6.5%
GDP
growth
in
2024
on
the
back
of
robust
imports
and
exports,
as
well
as
stronger
manufacturing
activity. 

The
optimism
in
the
Vietnamese
market
has
also
led
to
a
more
than
14%
surge
in
foreign
direct
investments
last
year
compared
with
2022.

According
to
LSEG
data,
$29
billion
in
foreign
direct
investments
were
pledged
to
Vietnam
from
January
to
November
last
year. 

China
accounts
for
half
of
the
new
FDI
inflows
into
Vietnam
this
year,
reflecting
the
attractiveness
of
the
Southeast
Asian
nation
as
a
rising
manufacturing
hub,
Yun
Liu,
ASEAN
economist
at
HSBC
said.

Now
is
the
right
time
for
investors
to
enter
Vietnam
stocks,
Andy
Ho,
chief
investment
officer
of
VinaCapital
Group
said.

“Over
the
next
6
to
12
months,
Vietnam
will
be
a
good
market
as
valuations
are
inexpensive
at
about
11
to
12
times
earnings
for
2023.
That’s
about
a
20%
to
25%
discount
to
the
regional
average,”
Ho
told
CNBC.

“The
average
daily
trading
volume
in
Vietnam
has
gone
from
$500
million
a
year
ago
to
about
a
billion
dollars
daily
today,”
he
said,
elaborating
that
investment
opportunities
can
be
found
in
consumption,
healthcare
and
real
estate
sectors.

“People
are
beginning
to
recognize
that
when
they
have
a
lot
of
liquidity,
they
don’t
want
to
put
it
in
the
bank
because
the
interest
rates
now
becoming
uninteresting,
and
then
looking
at
other
options
to
invest.”

Investors
should
also
be
bullish
on
Vietnam’s
e-commerce
sector,
Tyler
Nguyen,
vice-president
and
head
of
institutional
equity
sales
at
Maybank
Securities
Vietnam
said.

“We
are
seeing
20-30%
year-on-year
growth
every
year,”
he
told
CNBC,
pointing
out
that
e-commerce
accounts
for
only
2-3%
of
retail
sales.

When
asked
about
Vietnam’s
possible
entry
into
MSCI’s
list
of
emerging
market
economies,
Nguyen
said
the
frontier
economy
was
still
“at
a
very
nascent
stage”
but
“we
might
see
good
news
in
2025.”

Chinese
consumer
confidence
has
not
recovered
from
the
pandemic
due
to
high
youth
unemployment,
debt
risks,
and
a
perilous
property
sector,
causing
consumption
habits
to
become
more
“rational,”
Jefferies
said
in
a
note.

Although
pessimism
in
the
Chinese
market
is
unlikely
to
dissipate
soon,
analysts
say
there
are
still
bright
spots.

Jefferies
expects
sales
growth
to
normalize
next
year
and
has
advised
investors
to
look
at
consumption
sub-sectors
such
as
beer
and
sportswear.
Maybank
also
prefers
the
consumer
sector,
besides
China’s
“new
economy”
segment.

Jefferies
is
also
bullish
on
China’s
healthcare
sector,
recommending
investors
to
“cherry-pick”
stocks
that
are
poised
to
see
better-than-expected
growth
and
margin
expansion.