Wealth Outlook 2024 - Slow then grow

113 Wealth Outlook 2024 | Regional outlook Asia: faster growth for 2024 as headwinds recede FIGURE 5 Even after the 2023 rally, TOPIX EPS continue to be revised up, while valuations remain below historical average Forward PE Forward EPS Average PE 2010 2012 2014 2016 2018 2020 2022 2024 20 170 140 110 80 50 10 12 14 16 18 20 Source: Bloomberg, TOPIX Index, 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. All forecasts are expressions of opinion and are subject to change without notice and are not intended to be a guarantee of future events. Past performance is no guarantee of future results. Real results may vary. After a 15% rally in 2023 through November, the Tokyo Price Index (TOPIX) has a valuation of 14.5 times earnings, on par with its historical average. Meanwhile, earnings continued to be revised upward ( FIG URE 5 ). Financials would be a prime beneficiary of higher interest rates, which widen their net interest margins (the difference between the amount banks earn on loans and pay out on deposits). Elevated geopolitical risks could boost demand for Japan’s defense and semiconductor equipment industries. Japan’s partial reclaiming of its historic role from China as the preferred channel for accessing Asian development could be a multi-year tailwind for foreign investment, particularly in growth sectors like tech and consumer. Across sectors, governance reforms spearheaded by the Tokyo Stock Exchange continue to encourage dividends, buybacks and increases in productivity.