GUM: December 2023 Review & January 2024 Outlook

Feb 19, 2024
Reading Time: 5 minutes

In 2023, supply chains shifted from China, attracting global investors to Asia, particularly India and Japan. The Japanese stock market soared to a 30-year high, while US tech stocks thrived with the Nasdaq rising over 42%. In 2024, key elections will take place in the United States and various Asian countries, requiring investors to stay informed for sound investment decisions. 

United States-Neutral
US tech stocks surge in 2023, influenced by presidential election in 2024
In 2023, US technology stocks performed exceptionally well, with the Nasdaq index rising over 42%, significantly outperforming the 24% increase of the S&P 500 index. This was primarily driven by the strong performance of several tech giants’ stocks, with Nvidia experiencing a gain of over 200% in 2023. Additionally, in November 2024, the United States will hold its presidential election. Based on historical data, out of the past 11 elections, the US stock market recorded gains in 8 of them. As a result, the market holds an optimistic outlook for the performance of the US stock market in 2024. However, next year will still be influenced by factors such as the pace of interest rate cuts by the Federal Reserve, yield curve inversion, and high stock valuations.

Europe-Neutral
The inflation rate in the Eurozone hits a two-year low, and the central bank continues to maintain high interest rates
According to official data from the European Union, the inflation rate in the Eurozone has dropped to its lowest point in nearly two years. The CPI and the core CPI have both declined to 2.4% and 3.6% respectively. The European Central Bank has indicated that they will maintain higher interest rates for a period of time, and future trends will depend on economic data and other relevant factors.

In the UK, despite a decrease in the inflation rate to 3.9%, the economic confidence index reached its lowest level since August in the past month, approaching the lows of 2023. More and more investors are starting to bet that the Bank of England will cut interest rates earlier to support the economy.


Asia Region-Slightly Positive
In 2023, the Asian markets performed exceptionally well, and key elections are expected to have an impact on the market
Strong Performance in Asian Markets: India’s stock market has seen eight consecutive years of growth, with a market value surpassing $4 trillion, making it the world’s seventh-largest market, overtaking Hong Kong. Vietnam’s GDP has already grown by 5.05% in the early part of the year, exceeding the government’s expectations. Since the global pandemic, many supply chains have shown a trend of de-Chinafication, presenting opportunities for other Asian countries. However, 2024 will see several countries or regions holding key elections that may impact Asian markets, including India, Taiwan, and Indonesia. Investors should closely monitor the election outcomes and related policy changes to make informed investment decisions.


China-Neutral
The stock markets in China and Hong Kong have experienced consecutive declines, indicating that the economic recovery in China remains fragile
In 2023, the stock markets in China and Hong Kong performed poorly, with the Hang Seng Index experiencing its fourth consecutive year of decline, dropping by 13.8%. This is the first time in history for such a four-year decline. Foreign investors remain cautious due to the fragile economic recovery in China, low consumer confidence, and deflationary pressures. China’s GDP growth rate is projected to further slowdown to 4.5% compared to the previous year.

Japan-Neutral
The Japanese stock market has reached a 30-year high, and negative interest rates may come to an end
In 2023, global investors flocked to the Japanese stock market, driving the Nikkei Index to a new high not seen in over 30 years, with a cumulative increase of around 30% for the year. The Japanese stock market benefited from undervalued stocks, accommodative monetary policies, and the post-pandemic economic recovery, attracting the attention of many investors. However, the Bank of Japan has stated that it is not in a hurry toend its ultra-loose monetary policy, as it remains uncertain whether Japan’s inflation can sustainably reach the central bank’s target of 2%.

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