Fidelity: Eyes of Asia on Japan and India

By: Trademagazin Date: 2024. 01. 05. 11:01

China’s future development is the biggest uncertainty factor in the region, but it is far from the only economy that will move Asian markets in the coming year. Japanese stocks may continue to outperform as the economy enters mild inflation after decades of stagnant growth and falling prices. It is no surprise that India is likely to become one of the fastest growing economies in the world in the coming years. With an ever-expanding working-age population, the country will produce and consume more goods and services, and Fidelity analysts also expect significant technological innovation.

In Japan, consumption is booming as a spillover effect of wage increases, which may cause further price increases. The mood of households is starting to shift from saving to spending, and this will have wide-ranging and lasting effects. At the same time, Japanese corporate governance reforms are releasing additional stock market values. Companies place more emphasis on dividend payments and share buybacks. The shareholder return profile of the Japanese market may improve faster than that of most other developed markets. With policymakers increasingly confident that the country’s mild inflation has reached sustainable levels, it is only a matter of time before the Bank of Japan further loosens its already ultra-loose monetary policy and abandons its yield curve control policy altogether. This monetary normalization will help attract investors to the local bond market.