The Asian market is expected to outperform the US market as a “growth de-synchronisation” emerges between the two regions, abrdn reports.
According to the global investment company, Asia holds significant potential for long-term investors as the region is projected to double the earnings growth of the US.
René Buehlmann, abrdn CEO of investments, believes the growth de-synchronisation between the two regions will occur mid-year when the Federal Reserve pauses and begins cutting interest rates.
“There is stronger earnings resilience in Asia, and the region’s earnings for 2024 are expected to grow at twice the rate of the US,” he noted.
“We believe that investors are likely to reward Asia for its robust earnings growth and lower downgrade risks, and we expect key markets such as Korea, Taiwan, India and Japan to be the main performers in Asia.”
In particular, Japan and India are pinpointed as being the “brightest spots” for investment opportunities, the investment chief executive said.
“The Indian economy is at the initial phase of a cyclical upturn, positioning it as one of the fastest-growing countries on a global scale.”
The nation’s bond market has delivered “substantial outperformance” compared to other asset classes due to significant reforms over the past decade.
Buehlmann continued: “The Indian bond market outlook remains bright, and this is an opportune time for investors to position themselves in the market.”
Looking towards Japan, the investment firm highlighted attractive top-down and bottom-up factors underpinning the equities market as Japanese companies prioritise profitability and capital return.
“The Tokyo Stock Exchange’s efforts to enhance corporate profitability and governance have accelerated corporate restructuring, dividend payouts and stock buybacks, all contributing to a positive outlook,” Buehlmann added.
All eyes remain on China
Market watchers across the globe have long paid attention to China’s economic reopening throughout 2023, including its impact on the domestic and global economy.
The abrdn executive sees positive signs for the market recovery of China, with current valuations appearing attractive. Additionally, macroeconomic indicators demonstrate that targeted policy is producing positive results.
“A recovery in consumption services has commenced, with the potential to broaden out as consumers normalise their savings rate.
“A restocking cycle is in progress, expected to gain momentum in the coming months, and we are optimistic that these developments could restore both corporate and consumer confidence, potentially leading to a sharp rebound in China.”
The firm holds high expectations for those that can adapt to shifting regulation and align with Chinese policy objectives. Specifically, areas such as digital innovation, green technology and affordable healthcare will be at the forefront.
