Asia’s best potential performing markets hold on in first half of 2024: Taiwan, Japan maintain records

Optimism in the artificial decision boosted Taiwan’s hold market in early 2024, making it the market to look out of control in Asia-Pacific so far this year.

Taiwan weighted index Via AI Value Chain Shares have gained 28% so far this year.

weighty Taiwan Semiconductor Production Corp. Soared 63% in the first half of the year, outpacing rival Foxconn – traded as Hon Hai Precision Trade – Jumped 105% in the same length.

“The performance of global markets this year has been largely driven by artificial intelligence and central bank policy themes and this is likely to continue,” said Rahul Ghosh, world equity portfolio specialist at asset control firm T. Rowe Worth. The company’s funding outlook.

The scope and scale of the AI ​​investment cycle is driving financial engagement globally, he said, adding that the impact of AI investments is extending to sectors such as industrials, textiles and utilities.

Japan’s benchmark index Nikkei 225 The patch is in second place, surpassing all previous highs this year. Nikkei has gained about 18% in the first six months of the year.

The Nikkei broke a 34-year-old record in February, surpassing its earlier all-time top of 38,915.87, set on December 29, 1989.

After that, the index rose to the mental range of 40,000 throughout the week, and sooner or later reached the untested all-time top of 40,888.43 on March 22.

Analysts told CNBC that Taiwan could top Asian markets in the future, with Japan appearing to be a popular market in the future.

Ghosh said improved corporate governance standards continue to have a solid – and very broad – impact on corporate performance in the world’s fourth-largest economy.

Additionally, a June 14 message from Ben Powell, lead APAC funding strategist at BlackRock Funding Institute, showed that Japan’s warehouse confidence is rising that it is going to meet its inflation targets, and thus, its financials. Will normalize the coverage. A gradual and measured approach.”

Powell said Japan’s macroeconomic backdrop is favorable for potential wealth. “We remain overweight on Japanese equities, driven by strong corporate recovery momentum, healthy earnings and valuation support from still negative real interest rates.”

Most future Asian markets are in definite range year-to-date, with three hold markets – Thailand, Indonesia and the Philippines – lost in unfavorable range.

Thailand’s SET index fell 8% within the first six months, the worst-looking index within the patch. The Jakarta Composite was up 2.88%, with the Philippine Hold Exchange index slipping about 0.6% over the same period.

Most central banks in Asia are keeping a similar eye on the Fed’s next move, as they make financial coverage choices taking into account the expected moves of the US central locker in most cases.

The Fed hinted at the end of 2023 that it would make several rate cuts this year.

On the other hand, the latest “dot plot” from the Fed’s May meeting projected only a reduction of 25 basis points for the 2024 addition. This was a far cry from the immunity graph in late March, where the Fed implication is that rates will be cut by 75 basis points in 2024.

The dot plot is a visual depiction of the projection of each FOMC member’s interest rate to the locker’s floating interest rate on specific issues in the future.

On the other hand, the central bank has considered a more competitive path to fiscal policy tightening in 2025, and raised its forecast to four cuts of 25 basis points each.

Expectations for tariff reductions were repeatedly driven as inflation remained more stable than anticipated. Higher job and wage growth in the US also added to the narrative that there was no point for the Fed to lower rates.

Now the question is when will the first rate reduction happen?

The CME FedWatch tool indicates that 61% of investors are expecting the Fed to cut rates by 25 basis points at its September meeting.

However on June 16, Minneapolis Federal Reserve Chairman Neel Kashkari said it was a “reasonable prediction” that the US central bank would lower interest rates once this year, but would have to wait until December to do so.

Kashkari’s view was echoed by Ken Orchard, head of world mounted revenue at asset control company T. Rowe Worth.

“We still see the Fed cutting 25 basis points at its December policy meeting after the election in November, and possibly once in the summer.”

On the other hand, he predicted that the central bank will cut less in 2025 than the dot plot suggests, calling the 2025 outlook “vague” compared to this year.

“While a rate cut or two next year seems more realistic, the possibility that the Fed may even raise borrowing prices later in the year seems more realistic,” Orchard said, giving an ultimatum.

“There is a risk that insurance cuts by the Fed could lead to an increase in inflation and increase the likelihood of a return to hiking bias in 2025.”

Homin Lee, senior macro strategist at Swiss personal locker Lombard Odier, looked extra positive, telling CNBC that his bottom case is 2 cuts in the second half of 2024.

This is not one of the 3 cuts Lockyer predicted in his May 9 outlook note, ahead of the Fed’s revised dot plot.

“Given the Fed’s ‘asymmetric’ stance, we still believe rate cuts will start in September, meaning the hurdle for renewed tightening is too high while the hurdle for the start of rate cuts is too low,” Li said. is less.”