Asian market ‘twice the potential of US’ in 2024: abrdn

The Asian investment market holds “significant potential for long-term investors” and, by the middle of this year, will likely outperform the currently booming US market, abrdn chief executive of investments Rene Buehlmann has predicted.

Shining a light on the increasing opportunities present in the East, with the region having faced a mixed recovery following the Covid crisis, Buehlmann predicts a growing ‘desynchronisation’ between Asian and US markets – with the former to soon outshine the latter.

This, he said, will be triggered by an inevitable Federal Reserve rate pause, and even potential cuts, as inflation concerns in the US subside and economic growth slows.

“There is stronger earnings resilience in Asia and the region’s earnings for 2024 are expected to grow at twice the rate of the US,” Buehlmann said.

“We believe that investors are likely to reward Asia for its robust earnings growth and lower downgrade risks, and we expect key markets such as Korea, Taiwan, India, and Japan to be the main performers in Asia,” he said.

Japan and India are particular standouts in the region, Buehlmann believes.

“The Indian economy is at the initial phase of a cyclical upturn, positioning it as one of the fastest-growing countries on a global scale,” Buehlmann said.

The continuing outlook for the booming Indian bond market remains bright, he said, adding that now is the opportune time for investors to position themselves in the market.

“Driven by significant reforms over the last decade, the Indian bond market has delivered substantial outperformance versus a wide range of asset classes,” he said.

For Japan, equities are the go, with “compelling top-down and bottom-up factors” driving the market.

Moreover, he said, Japanese companies are increasingly prioritising profitability and capital return, driven by improved governance measures.

“The Tokyo Stock Exchange’s efforts to enhance corporate profitability and governance have accelerated corporate restructuring, dividend payouts, and stock buybacks, all contributing to a positive outlook,” he said.

‘Sharp rebound’ prospect for China

Buehlmann is also sanguine on China, seeing positive signs for a market recovery, backed by data showing improved consumption levels as well as rates of individuals’ savings, with targeted government action also taking effect.

Current valuations appear attractive, the abrdn investment chief said, with macro indicators showing that targeted policy support is yielding positive results.

“A re-stocking cycle is in progress, expected to gain momentum in the coming months and we are optimistic that these developments could restore both corporate and consumer confidence, potentially leading to a sharp rebound in China.

“We remain positive on companies that can adapt to changing regulatory frameworks and align with Chinese policy objectives, particularly in areas such as digital innovation, green technology, affordable healthcare, and improving livelihoods,” he added.