During the Investment Forum 2024 in Johannesburg, Liang Du, CEO of Prescient China, spoke about China's potential as an emerging market. Despite being one of the worst-performing equity markets in 2023, China is transforming into a world-class innovation hub and remains an attractive investment opportunity. Du highlighted China's strengths in terms of currency, trade, innovation, and the business environment. He emphasized that investors should not judge China's equities based on its performance in 2023, as the country is undergoing significant transformation.
LGT Private Banking Asia also provided insights into the global and Asian economic outlook for 2024. They advised investors to consider US investment-grade corporate bonds in the first half of 2024 and shift towards stock market investments in the second half. The US economy is expected to have a 'soft landing' in H1 2024, with a 2% real growth and a return to the 2% inflation target by Q3 2024. Europe is expected to face challenges, but a modest cyclical rebound is anticipated. Japan is expected to have strong profitability for companies in 2024, with a shift from deflation to inflation. India is identified as the second most preferred market in Asia, with substantial investments in physical infrastructure driving GDP growth. China's economic growth is projected to be modest at around 5%, and Thailand is expected to have a 3% GDP growth in 2024. Thailand's exports face competition from China, the US, Mexico, and India.
During a market outlook event for HSBC Premier Elite customers, a panel of experts discussed various topics including economies, stock markets, bonds, and equities. Mr James Cheo, chief investment officer at HSBC Global Private Banking and Wealth (South-east Asia and India), expressed cautious optimism for the outlook of 2024, stating that it is likely to be an older bull market in terms of the stock market. When discussing the top risk for markets in 2024, Mr Cheo highlighted the importance of building a globally diversified portfolio to mitigate geopolitical risks. He also mentioned that China's economy is still investable, with opportunities in sectors such as services and consumption. The panel also discussed the top conviction for 2024, with Mr Cheo emphasizing the potential growth and opportunities in Asean and India. In terms of the Singapore economy, Mr Cheo predicted a growth rate of 2-3% and highlighted the recovery in the global electronics cycle. He also expressed bullishness on Indonesia and India for 2024, citing their strong growth potential. The panel provided insights on investor preparation for interest rate movements, the outlook on the Singapore equity markets, and the view on S-Reits (Singapore real estate investment trusts).
Hong Kong-based Gaw Capital Partners is focusing on logistics in Vietnam and Mexico, as well as the artificial intelligence (AI) sector in the United States, to offset economic challenges in mainland China. The firm is investing in countries that are the biggest beneficiaries of the 'China plus one' strategy, which seeks to diversify manufacturers' reliance on the mainland. Vietnam, India, and Mexico are seen as the countries most likely to capture business from China. Gaw Capital is also eyeing the distressed office market in the US and betting on AI development in the next 10 years. The company has raised $22.3bn in equity since 2005 and has $33.7bn in assets under management as of Q3 2023.
Investment managers foresee a cautious economic landscape with potential for a US slowdown or ‘soft landing’, influenced by weaker consumer spending and policy shifts. Most investment managers are neutral or underweight developed market equities in 2024, except for Japan. State Street Global Advisors (SSGA) and Morgan Stanley IM see Japan as an attractive market. Developed market equities are a tricky bet, with managers focused on quality, value, and defensive sectors. Managers are positive on developed market fixed income, with nuances on duration and market segments. Views are mixed on US corporate investment-grade and high-yield bonds. Managers are overweight emerging markets ex-China equities due to favorable macro backdrop, structural and cyclical growth stories, attractive valuation, and diversification. Managers prefer emerging markets local-currency sovereign bonds. Investment managers present a cautiously optimistic view of the Chinese macro economy, acknowledging challenges and potential growth areas. Risks to watch include geopolitical risks, economic and policy risks, and transversal risks.
HSBC Global Private Banking expects the improving global economic cycle, broadening earnings growth, and central bank rate cuts to bring opportunities in quality bonds and equities. They adopt a risk-on investment strategy with zero allocation to cash and overweight on global equities, US Treasuries, and global investment grade bonds. They hold a bullish view on the US dollar and believe that portfolio performance will be powered by attractive bond yields and broadening earnings growth. They recommend broadening equity exposure, putting cash to work in bonds and multi-asset strategies, tapping into private assets and infrastructure, and unlocking opportunities in Asia. They expect China's GDP growth to go sideways in the second half of the year and remain mildly underweight on Thailand equities. They recommend four top investment themes for Asia: corporate governance reform winners, reshaping Asia's supply chain, the rise of India and ASEAN, and Asia's digital transformation.
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