Asian Stocks Close 2024 On A High, With Taiwan Leading The Pack

Asian markets ended 2024 on a strong note, with most major indices finishing the year in positive territory. The rally was driven by an easing of monetary policies across the region and a surge in tech stocks fueled by the AI boom. However, not all markets fared equally, with Taiwan standing out as the clear winner and South Korea lagging behind.

Taiwan’s Tech-Fueled Surge

Taiwan’s Taiex emerged as the top-performing index in the region, climbing 28.85% as of December 23. The country benefited significantly from its tech-heavy composition, with major players like Taiwan Semiconductor Manufacturing Company (TSMC) and Foxconn (Hon Hai Precision Industry) seeing massive gains of 82.12% and 77.51%, respectively.

This growth was propelled by robust demand for AI-related technologies, including data centers and servers, as well as optimism about expanding applications of AI in consumer electronics in 2025.

DBS Bank noted that the global semiconductor industry typically follows an expansion cycle of approximately 30 months, which began in September 2023 and could continue through late 2025.

Hong Kong and China: Strong Performers in Recovery Mode

The Hang Seng Index in Hong Kong followed closely, gaining 16.63% for the year. Meanwhile, China’s CSI 300 broke a three-year losing streak to rise 14.64%, reflecting Beijing’s concerted efforts to stabilize its economy through fiscal and monetary support.

China’s performance was supported by export-driven growth, but analysts warned of potential challenges in 2025, including geopolitical tensions and U.S. tariff policies under the incoming Trump administration.

South Korea: A Year to Forget

South Korea’s Kospi was the region’s sole underperformer, losing 8.03% in 2024. Despite government initiatives like the “Corporate Value-Up” program, the market faced headwinds from tariff fears, political uncertainty following the impeachment of President Yoon Suk Yeol, and weak investor sentiment.

Paul Kim, head of equities at Eastspring Investments, highlighted that South Korea’s export-dependent economy remains vulnerable to global headwinds, including tighter U.S. monetary policy and a slowing semiconductor cycle.

2025 Outlook

The new year brings a mixed outlook for Asia. According to Nomura, 2025 will be marked by diverging monetary policies, geopolitical uncertainties, and a potential slowdown in the tech cycle.

• Impact of U.S. Policies:
  The return of Donald Trump to the U.S. presidency is expected to bring higher tariffs and trade barriers, which could weigh on Asia’s export-driven economies. Nomura predicts these policies will exacerbate inflation and dampen business investment.
• China’s Challenges and Opportunities:
  While China’s GDP growth is projected to slow from 4.8% in 2024 to 4.0% in 2025, analysts see potential opportunities for companies catering to Chinese consumers. However, Beijing faces the monumental task of addressing its embattled property market, fixing fiscal imbalances, and reducing geopolitical tensions.
• Regional Resilience:
  Economies with strong domestic demand, such as Malaysia and the Philippines, are expected to outperform, while countries like South Korea, India, and Thailand may face challenges.

Navigating Uncertainty

Despite strong momentum in 2024, experts warn of “rougher seas” ahead. While the AI boom and export frontloading are expected to provide a temporary lift in early 2025, the region will need to contend with tighter financial conditions, geopolitical pressures, and potential trade disruptions.

As monetary policies in Asia diverge, countries exposed to foreign exchange risks may ease rates to support growth, while others with stronger inflationary pressures may adopt tighter policies.

With challenges ranging from global trade tensions to slowing semiconductor demand, investors will closely monitor key developments in China, U.S. trade policies, and the broader macroeconomic environment as the new year unfolds.