Taiwan Leads Asian Stock Markets in 2024 — Trump Tariffs, China’s Cloud Economy Outlook
An Nvidia chip during the Taipei Computex trade show in Taipei, Taiwan on May 29, 2023.
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Asia-Pacific stocks performed well in 2024, with most major markets ending the year in positive territory as the region’s central banks eased monetary policy, while the AI boom lifted tech stocks.
Taiwanese Taiex led growth in the region, up 28.85% since December 23, while Hong Kong Hang Seng index in second place with 16.63%.
Asia successfully reduced inflation faster than the rest of the worldsaid Mike Shiao, chief investment officer for Asia and formerly Japan at investment management firm Invesco, paving the way for monetary easing.
“As the Federal Reserve has now begun its easing cycle, Asian countries will have more room to cut interest rates in 2025,” he said in a note. Easier monetary policy tends to boost stocks.
The market’s focus on technology and technology-related stocks helped lift Taiex. Heavyweights A Taiwanese semiconductor company up 82.12% in 2024, and Apple’s main supplier Foxconn — which trades as Hon Hai Precision Industry progressed 77.51%.
While it is the demand for AI data centers and servers could decrease after strong growth this year, demand for AI-enabled mobile phones, PCs and other consumer electronics could increase in 2025, according to a forecast by DBS Bank.
DBS noted that the global semiconductor sector typically goes through an expansion cycle that lasts about 30 months. The current cycle, which started in September 2023, has the potential to extend until the end of 2025.
While tech stocks helped lift Taiwan, they couldn’t save South Korea, which was the only major Asian market to end the year in negative territory. The government’s “enterprise value enhancement program” appears to have failed to boost inventories, with fears of tariffs and political turmoil that increases uncertainty.
A measure of the earth Kospi it has lost 8.03% since December 23, making it Asia’s worst performing market.
Major economies, particularly the US and China, will greatly influence South Korea’s export-led economy, said Paul Kim, head of equities at Eastspring Investments, in the firm’s 2025 outlook.
“Major exporters such as information technology hardware and automatic devices could face challenges,” he added.
The impeachment of Chairman Yoon Suk Yeol will undoubtedly weigh on investors’ minds, with Lorraine Tan, director of Asia equity research at Morningstar, telling CNBC earlier this year that “the longer the change in leadership takes, the more likely investors will be on the sidelines.”
Kim also said the government would play a key role in the country’s markets, noting that potential reforms in corporate regulations, fiscal stimulus measures and the possibility of further rate cuts by the Bank of Korea could help the business environment and boost domestic demand.
Outlook 2025
The two main areas on investors’ minds in 2025 will be the presidency of Donald Trump and the state of the Chinese economy, according to George Maris, chief investment officer and global head of equities at Principal Asset Management.
The policies of the incoming Trump administration are likely to affect the outlook for growth and inflation in Asia in 2025, according to Nomura. “We expect an increase in tariffs early next year which will lead to higher inflation and slower investment growth.”
Nomura said higher tariffs and trade barriers would mean weaker exports from Asia. Increased uncertainty and retaliation could delay business investment in the region.
Economies that depend on manufacturing and trade, such as those in Asia, are likely to be more negatively affected, “as tariffs lead to reduced trade flows and put pressure on growth,” Freida Tay, institutional fixed income portfolio manager at Global Investment Manager MFS Investment Management told CNBC.
Nomura predicts that Asia will also have to deal with tighter global financial conditions in 2025, due to higher rates and a stronger dollar.
At its last meeting in 2024, the US Federal Reserve signaled that there would be fewer rate cuts 2025, while raising inflation forecasts.
Nomura sees “differing outlooks for monetary policy” across the region, saying countries like China, Australia, South Korea and Indonesia that are more exposed to currency risks will see monetary easing in 2025.
Loose monetary policy usually weakens a country’s currency, making exports cheaper and potentially supporting growth in terms of tariffs.
On the other hand, countries that have “strong growth, higher inflation and still accommodative monetary conditions” will raise rates, such as Japan and Malaysia.
Overall, 2025 comes with a lot of uncertainty, according to experts.
Nomura analysts write that there is “turbulence ahead” for the region, noting that while strong AI demand and an export shift should provide some support to growth in the first quarter, the region “appears to be headed for rougher seas” from the second quarter, due to the impact of the Trump presidency , China’s overcapacity and a slowdown in the semiconductor cycle.
The company, however, sees better growth in Asian economies with stronger domestic demand buffers, such as Malaysia and the Philippines, while India, Thailand and South Korea are likely to face problems.
China: challenges and opportunities
The state of China’s economy will also be a key area of focus for Asian investors, with traders watching for a “significant commitment to sustainable growth” in Asia’s second-largest economy, Maris said.
In 2024, China’s stock markets snapped a three-year losing streak, with the CSI 300 gaining 14.64%, as Beijing focuses on strengthening its economy.
Analysts at Nomura expect more stimulus from China to support its economy, while stressing that Beijing must stabilize its faltering real estate market, fix its fiscal system, boost social assistance and ease geopolitical tensions to “achieve a real, sustainable recovery.”
“This is a tall order at a time when China’s exports — the single largest contributor to growth in 2024 — could face strong headwinds after Trump’s return. While Beijing may stick to its GDP growth target of “around 5%,” we expect growth will slow to 4.0% in 2025 from 4.8% in 2024,” Nomura said.
Maris sees opportunity in the world’s second largest economy. He is “constructive” towards companies that have exposure to Chinese consumers.
He said these companies often trade at attractive valuations, “given the prevailing negative sentiment”, but if government stimulus comes in, these companies are likely to benefit from improved demand.
