Asia economic and investment outlook for second half of 2024

Societe Generale’s Cross Asset Research team recently shared their views on Asia’s economic and investment outlook for the rest of the year, including central bank policies, China’s economic growth amid sluggish property market, and broader trends in Asia equities and FX.

_{(From left to right) Frank BENZIMRA, Head of Asia Equity Strategy and Multi-asset Strategist; Michelle LAM, Greater China Economist; Kiyong SEONG, Lead Asia Macro Strategist}

Macroeconomic Outlook

-    China’s economic growth is expected to reach 5% this year, led by exports and investments.
-    Despite the ongoing downturn in housing activity, Chinese policymakers are committed to stabilising the property sector. Measures aimed at destocking and setting the price floor reduce the risk of a balance sheet recession. 
-    Consumption recovery has remained tepid and household deposit has been rising. The 3rd plenary session in July will provide more clarity on the policy direction, and a shift towards boosting consumption and increasing welfare spending will bode well for the economy.

Asia Equity Market Outlook

-    We recently re-weighted mainland China to overweight for the first time since 2022, driven by the potential recovery in earnings, attractive valuation compared with other Asian markets and a more favorable risk reward.
-    Despite the yen remaining inexpensive by every measure, the outlook for the Japanese market remains bullish in 2024, with value-oriented investments outperforming growth investments.
-    There are positives in the Indian market, such as its long-term growth story, but foreign investors have become more cautious about investing in the market, especially following the recent election.

Asia FX/Rates Market Outlook 

-    China and India are the two major emerging market (EM) bond markets experiencing a bond market rally in 2024. The Indian market is expected to continue outperforming other major currencies in 2024, while the momentum in China might not sustain.
-    Volatility in the China bond market is expected to rise with the market is reacting more sensitively to unexpected headlines.
-    There is a high chance of additional foreign bond flows into EMs including China and Korea. For China, it is dependent on the growth of assets under management in global bond funds and growth in FX reserves.