Wealth Outlook 2024 - Slow then grow

108 Wealth Outlook 2024 | Regional outlook Asia: faster growth for 2024 as headwinds recede FIGURE 1 In a turbulent year like 2023, Asian equity markets sawwide divergence in performance (USD terms) 2023 YTD MSCI equity market total returns (%) ˛20 ˛10 0 10 20 USA TAIWAN WORLD JAPAN EUROZONE EM ASIA X CH S. KOREA INDIA UK INDONESIA SINGAPORE PHILIPPINES MALAYSIA CHINA THAILAND HONG KONG ˛20 ˛10 0 10 20 Source: Bloomberg, MSCI Equity Market Total Returns Indices, as of November 14, 2023. Indices are unmanaged. An investor cannot invest directly in an index. They are shown for illustrative purposes only and do not represent the performance of any specific investment. Index returns do not include any expenses, fees or sales charges, which would lower performance. Past performance is no guarantee of future results. Real results may vary. A better 2024 ahead In 2024, the macro headwinds facing Asia broadly will likely subside. The Fed is past its peak tightening and may shift into easing mode if US employment weakens as we expect. This should put US rates and the dollar on a more moderate track. Asian inflation is moderating, with most consumer price index readings across the region substantially below their third- quarter 2022 peaks. Monetary policy is broadly more flexible in the event growth underwhelms. China remains the global and regional wild card for 2024. Its economy failed to sustain recovery after its COVID reopening due to a confluence of factors anchored by a major crisis in the residential real estate market. Chinese policymakers have taken many targeted steps to address growth issues across China, but structural challenges remain. We do see several constructive developments in the region’s other major markets that could bear fruit in 2024 and beyond. China: unclear policy outcomes 2023 has beenmonumentally volatile for China. Re- opening optimism in the first quarter quickly reversed in the second. In the summer, fears of China’s “Lehman moment” dominated headlines as major property developers defaulted. But by September, piecemeal stimulus programs seemed to be having some positive impacts as seen in its macroeconomic data. More potent policies were announced in the fourth quarter, including sovereign fund stock purchases and fiscal stimulus of a trillion yuan each to boost infrastructure and housing demand. At this point, a modest cyclical economic recovery appears underway. So far, the stock market has not been impressed. The CSI 300 was up just 2% through November 24, 2023 from its lows reached in late October. We think the anemic performance comes down to two issues: policy ineffectiveness and weak consumer sentiment.