Asian Markets Kick Off the Week with a Positive Start
In a promising start to the week, Asian markets have shown an upbeat note. Japan’s Nikkei 225 index has surged above 40,000 for the first time, extending its historic rally. This milestone comes just days after the index set a record closing high of 39,098.68, surpassing its previous peak in 1989.
The Nikkei index, which saw a 0.5% increase on Monday, has been on an impressive upward trajectory for over a year. This growth can be attributed to strong corporate earnings, a weaker yen that benefits exporters, and an influx of foreign investors seeking an alternative to China’s struggling markets. Jefferies analysts predict that Japan will be one of the top-performing markets between 2023 and 2030, stating that “the great shareholder return story in Japan has begun.”
With a surge of over 20% this year, the Nikkei index stands as the best performer among major equity indexes worldwide. This positive momentum follows a rally in US stocks late last week, where both the Nasdaq and the S&P 500 reached new record highs. The boom in chipmakers and artificial intelligence stocks contributed to this surge.
Taiwan’s stock market also experienced a boost due to optimism surrounding semiconductors. The benchmark Taiex hit an all-time high on Monday, led by Taiwan Semiconductor Manufacturing Company, the world’s largest contract chipmaker. With a 5.2% increase, the company plays a crucial role in manufacturing AI chips for companies like Nvidia.
While Japan and Taiwan celebrate their market successes, South Korea’s Kospi gained 1.2%, and Hong Kong’s Hang Seng shed 0.5%. Investors are closely monitoring Chinese markets as mainland Chinese stocks trade cautiously higher. The upcoming annual gathering of the National People’s Congress (NPC), China’s rubber-stamp legislature, has drawn attention. Premier Li Qiang is expected to announce China’s 2024 growth target on Tuesday and unveil stimulus measures to revive the struggling economy.
Stephen Innes, managing partner at SPI Asset Management, emphasizes the significance of the NPC meeting, stating that it will provide crucial insights into China’s economic priorities, strategies, and potential market developments. These announcements and policies will shape investor sentiment and asset allocation decisions both domestically and globally. Chinese policymakers face numerous challenges in boosting the economy, including stabilizing the property sector, countering deflationary pressures, reversing foreign capital outflows, and revitalizing the stock market.
Analysts widely anticipate that this year’s growth target will be set around 5%. Last week, the Communist Party’s Politburo pledged to meet economic growth targets for 2024 by stimulating domestic demand and promoting tech and innovative industries. In 2023, China’s economy expanded by 5.2%, meeting the official target.
As Asian markets continue to show resilience and potential, investors eagerly await further developments and announcements that will shape the trajectory of these economies in the coming years.
