September 2024 Outlook: United States-Neutral | Europe-Neutral | Japan-Slightly Negative | China-Neutral | Asia-Slightly Negative
With the U.S. presidential election approaching, the debate between Kamala Harris and Donald Trump has drawn attention, and market focus is on the expected interest rate cut in September. The European Central Bank has reduced rates again, while geopolitical risks continue to impact the economy. Meanwhile, Asian markets are seeing a trend of capital shifting to lower-risk assets.

🇺🇸 United States-Neutral
Uncertain Presidential Election Results: Market Awaits September Rate Cut
With the U.S. presidential election approaching, Democratic candidate Kamala Harris and Republican candidate Donald Trump participated in a televised debate. While the media generally views Harris as having performed better, aggregate polls indicate that their support levels are close, with Harris leading by only one to two percentage points.
August’s non-farm payroll data fell short of expectations, causing the S&P 500 index to consolidate between 5400 and 5700. Market focus is now on the Federal Reserve’s meeting on September 18, where over 80% of market participants expect a 25 basis point rate cut. The technology sector is showing weakness, while essential consumer goods and financial stocks are performing relatively well.
Given the shadow of an economic recession, the market volatility index (VIX) is nearing 20, suggesting that a temporary reduction in exposure to U.S. stocks may be advisable.
🇪🇺 Europe-Neutral
Eurozone Rate Cut Amid Geopolitical Tensions
In September, the European Central Bank announced a 0.25% rate cut to bring the deposit rate down to 3.5%, marking the second reduction in three months and aligning with market expectations. In August, the MSCI Europe index rose by 1.4%.
While inflation data has shown some improvement, the recent escalation of the Russia-Ukraine conflict has impacted market performance. Additionally, the European Union’s plans to impose extra tariffs on imports of Chinese electric vehicles may still affect sales, despite potential tariff reductions being considered.
Though inflation figures are improving and the euro is strengthening, geopolitical risks persist, creating uncertainty in the market. Investors are advised to remain cautious and observant.
🇯🇵 Japan-Slightly Negative
Yen Rebound Raises Concerns of Carry Trade Liquidation; Nikkei Index Volatility Expands
In August, the Nikkei index rebounded from 31,000 points to 38,000 points, yet it has not returned to its previous highs. Japan has revised its second-quarter GDP down to 2.9%, and the strengthening yen may trigger a new wave of liquidations.
Additionally, Prime Minister Yoshihide Suga has resigned, with the Liberal Democratic Party’s presidential election scheduled for September 27, where the new leader will become Japan’s next prime minister. It is unlikely that Japan will raise interest rates in September. Given these unstable factors, it may not be the best time for investment.
🇨🇳 China & Hong Kong-Neutral
China’s Growth Slows, but Hong Kong Market Remains Resilient
UBS has lowered its economic growth forecasts for China for this year and next to 4.6% and 4%, respectively, primarily due to a sharper-than-expected decline in the real estate market. The Shanghai Composite Index fell from 2,938 points at the beginning of August to 2,842 points, a decline of 3%, underperforming compared to other stock markets. Additionally, the impact of electric vehicle tariffs has weakened domestic investment sentiment.
In contrast, the Hong Kong stock market has shown relative strength, rising 3.7% in August to reach 17,989 points. Alibaba’s dual primary listing on the Hong Kong Stock Exchange and its inclusion in the Stock Connect programs have provided positive momentum for the market. However, a joint business warning issued by the U.S. State Department and other agencies could undermine foreign investor confidence.
Overall, the outlook for the Hong Kong market appears more favorable compared to the Chinese market, maintaining a neutral stance on both.
Asia-Slightly Negative
Slowing Tech Stock Momentum Affects Asian Economic Outlook; Capital May Shift to Lower-Risk Assets
The recent slowdown in the momentum of tech stocks has adversely impacted the economic forecasts for countries that export electronic components, with South Korea’s export growth also showing signs of deceleration in July, indicating an unstable recovery.
Although the MSCI Asia index rose by 1.8%, the overall outlook for Asia remains challenged due to weak economic expectations from China. Additionally, global market sentiment has been influenced by fears of a U.S. recession, leading to a potential shift of capital towards lower-risk regions and assets.
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