November 2024 Outlook: United States-Slightly Positive | Europe-Neutral | Japan-Slightly Negative | China & Hong Kong-Neutral | Asia-Neutral
Donald Trump has won the U.S. presidential election, and the Federal Reserve has cut the interest rates. The European Central Bank has lowered the rates by 0.25%, and the Russia-Ukraine war is showing signs of escalation. Shigeru Ishiba successfully retains his position as Japan’s 103rd Prime Minister, while the Bank of Japan maintains its interest rate at 0.25%, with the Nikkei Index dropping to below 39,000 points. The National People’s Congress has passed a debt reduction proposal amounting to 10 trillion RMB, while trade faces tariffs from the U.S. and Europe with the Hang Seng Index falling to below 20,000 points. As the U.S. dollar strengthens, it is pressurizing on emerging Asian markets to face capital outflows.

🇺🇸 United States-Slightly Positive
Trump Has Won The U.S. Presidential Election; Federal Reserve Has Cut Rates
Republican candidate Donald Trump defeated Democratic Kamala Harris in the U.S. election, becoming the 47th President and securing a Republican majority in both the House and Senate. Following the election, U.S. stock indices performed well, and the Federal Reserve cut interest rates by 0.25 percentage points to a range of 4.5% to 4.75% on November 8, in line with market expectations.

Trump has begun selecting new government members and plans to establish a Department of Government Efficiency to reduce bureaucracy and unnecessary expenditures. He has appointed Tesla CEO Elon Musk as one of the leaders, and the market is expecting this can support the technology sector. Significant reforms in public health are anticipated, potentially putting pressure on the biotech market. In energy, Trump is expected to support the production of traditional energy, benefiting that sector, while putting pressure on renewables. On immigration, he will adopt strict measures to expel illegal immigrants.

Due to Trump’s strong US dollar policies, inflation may rise in the medium to long term, potentially slowing future rate cuts. Investors should pay attention to the result of the next meeting of the Federal Open Market Committee on December 18.

🇪🇺 Europe-Neutral
European Central Bank Has Cut Rates; Russia-Ukraine War Escalates
Due to declining inflation risks and weakening economic growth, on October 17, the European Central Bank announced a 25 basis point cut to its main interest rate, bringing it to 3.25%. This marks the third rate cut of the year and aligns with market expectations. Although inflation forecasts are more optimistic, the ECB remains cautious regarding the economic data. Investors should pay attention to the upcoming rate decision on December 12. European stock markets declined as corporate earnings fell short of expectations and concerns about Trump’s future policies emerged, with the MSCI Europe Index dropping 1.38% from November 7 to 18.

The Russia-Ukraine war is showing signs of escalation, with the U.S. confirming North Korean soldiers are participating in combat for Russia. The outgoing U.S. President Joe Biden has authorized Ukraine to strike military targets within Russia, prompting threats from Russia to use new weapon systems. While Trump has urged Vladimir Putin, the president of Russia, not to escalate the conflict and expressed a desire to resolve the war quickly, although concrete measures have yet to be implemented. Investors should closely monitor developments in the Russia-Ukraine situation following Trump’s inauguration.

🇯🇵 Japan-Slightly Negative
Shigeru Ishiba Re-elected as Japan’s 103rd Prime Minister; Bank of Japan Maintains Interest Rate
On November 11, Japan held a special parliamentary session to elect the Prime Minister, with Shigeru Ishiba successfully re-elected as the 103rd Prime Minister. However, the ruling party did not secure a majority in the House of Representatives, complicating Ishiba’s governance and creating uncertainty in the Japan market.

In terms of the monetary policy, the Bank of Japan announced on October 17 that it would maintain its policy rate at 0.25%, in line with market expectations. Trump’s victory in the U.S. election has also increased the likelihood of rapid yen depreciation, with the USD to JPY rising to 154. BOJ plans to raise the base rate to around 1% by the end of March 2026 to support the yen. Meanwhile, the Nikkei 225 index remains around 38,000 points. Given these uncertainties, it may not be the best time to invest in Japan.

🇨🇳 China & Hong Kong-Neutral
National People’s Congress Has Approved 10 Trillion RMB Debt Plan; Trade Faces Tariffs; Hang Seng Index Falls Below 20,000
On November 8, the National People’s Congress approved a debt reduction plan totalling 10 trillion RMB to alleviate local government debt pressure. However, the lack of specific consumption stimulus measures disappointed the market. From November 7 to 18, the CSI 300 index and Shanghai Composite Index fell by 4.7% and 4.2% respectively, while the Hang Seng Index dropped 6.57% to 19,577, below the 20,000 mark.

In addition, China’s foreign trade faces pressure. Starting from October 30, the EU imposed tariffs of up to 45.3% on Chinese electric vehicles, and Trump has threatened to impose 60% tariffs upon China, potentially triggering a trade war impacting on China’s exports. Investors should adopt a cautious stance toward the China & Hong Kong market.

Asia-Neutral
Strong Dollar Puts Pressure on Emerging Asian Markets
Following the surge in the Hong Kong and mainland markets in September, Asian investors have increased their investments in these markets, absorbing a significant amount of Asian funds. However, with the conclusion of the U.S. presidential election, the strengthening of the dollar, which has seen the dollar index rise to 106, has put pressure on other Asian markets, leading to capital outflows.

This year, the Asian market has shown signs of divergence, with regions like Taiwan and India performing well. The MSCI regional indices have reported year-to-date returns of approximately 39% and 13%, respectively. In contrast, South Korea and Vietnam have experienced negative returns of -12% and -8%. Given the potential for a new trade war under Trump’s administration, the market is currently adopting a cautious stance.

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