March 2024 Outlook: United States-Neutral｜Europe-Neutral｜Japan-Slightly Positive｜China-Neutral｜Asia-Neutral

It is expected that the US will start reducing interest rates in the second half of the year, the Nikkei Index has surpassed 40,000 points, and the Chinese stock market has rebounded. However, long-term pessimism towards the Chinese market still needs to be remedied.

🇺🇸 United States-Neutral
🏢 US Inflation Exceeds Expectations; Job Market Remains Strong
The United States has announced that the January Personal Consumption Expenditures (PCE) index, which is considered an inflation indicator by the Federal Reserve, rose by 0.4% for the core PCE index excluding food and energy. Over the past year, there has been an accumulated increase of 2.8%. The released PCE inflation data indicates that the Federal Reserve still has more work to do in cooling down price pressures. The market expects the Federal Reserve to begin reducing interest rates in the second half of this year, with two to three rate cuts expected within the year. While the US stock market is still performing well, the upward momentum of technology stocks is starting to slow down, leading to expectations of increased volatility in the US stock market.

🇪🇺 Europe-Neutral
💶 Eurozone Inflation Continues to Fall; France Lowers 2024 Economic Growth Expectations
The inflation rate in the Eurozone, consisting of 20 countries, has declined in 2023. European Central Bank President Lagarde stated that this trend will continue into 2024. The European Central Bank expects the current disinflationary process to persist, aiming to achieve the 2% target and to see more evidence of price growth returning to the target. Wage expectations may become an important factor driving price trends in the coming quarters, leading to a cautious stance in the European market for now. Additionally, France has revised downward its economic growth expectations for 2024.

🇯🇵 Japan-Slightly Positive
💹 Nikkei Index Surpasses 40,000 Points, Potential to Escape Deflation
The Nikkei Average Index has shown strong upward momentum, breaking through 40,000 points on March 4th and reaching a new all-time high. Additionally, Japan’s core inflation rate has exceeded expectations, reaching or surpassing the central bank’s target level for the 22nd consecutive month. It is also expected that Japan’s labor market will continue to experience stable growth. With rising wages and sustained achievement of 2% inflation, there is a possibility that the Japanese government will end its negative interest rate policy in the second half of the year, although overall wage data still needs to be observed. Due to increased market expectations for the removal of negative interest rates, the Japanese yen has strengthened against the US dollar, putting pressure on the Nikkei Index. However, the long-term outlook for Japan’s economic growth remains optimistic.

🇨🇳 China-Neutral
🤔 Chinese Stock Market Records Highest Net Inflow; Anticipating Favorable Market Policies from “Two Sessions”
According to a report by the International Institute of Finance, the Chinese stock market attracted a net inflow of USD$9.6 billion from foreign investors in February, reaching its highest level in over a year. At the same time, the net purchases of China A-shares through the Shanghai-Hong Kong Stock Connect reached a new high of 60.744 billion Chinese yuan, marking the highest record in the previous 13 months. The market generally believes that the current undervaluation of China A-shares is one of the main reasons attracting foreign capital inflows. Additionally, anticipation of new policies driving the economy following the “Two Sessions” has led to a rebound in the performance of the Chinese and Hong Kong markets in February. However, the confirmation of China’s economic recovery still depends on economic data.

Asia-Neutral
☄️ Asian Markets Benefit from Rebound in Chinese and Hong Kong Markets, But Long-term Outlook Depends on China’s Economic Data
The MSCI Asia (excluding Japan) Index has shown impressive performance since February, rising by 4.71%. It has outperformed the record-high S&P 500 Index and Nasdaq Index. Among them, the MSCI China Index and the Korea Index have led the gains, rising by nearly 5.9% and 7.8% respectively in February. The International Monetary Fund (IMF) predicts that the Indian economy will grow by 6.5% in 2024 and 2025. Despite the recent positive performance in Asia, the long-term outlook still depends on the recovery of the Chinese economy.