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Analysts Bet Big On 3 Asia-Pacific Markets in 2024: ETFs in Focus

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In 2023, the Asia-Pacific region witnessed a remarkable surge in its equity markets, with Japan's Nikkei 225 emerging as the top-performing index. As we embark on a new year, the question on investors' minds is: Which markets will outperform in 2024?

Analysts speaking to CNBC have identified India, Japan, and Vietnam as the top-performing markets to watch in the first half of 2024. Here's a closer look at each of these promising markets.

India - A Rising Star:

India's stock market gained significant traction in 2023, making it a favorite among investors. The benchmark Nifty 50 index soared by 20% and achieved a series of record-highs. The nation's economic growth is expected to outpace other major Asian economies in 2024, with the International Monetary Fund projecting a 6.3% increase in its real GDP for the year. This growth momentum is a crucial factor driving the surge in Indian stocks, especially as China faces challenges in meeting its GDP growth target.

India's stock markets have also benefited from strong earnings, expected interest rate cuts, and increased participation from domestic investors. These factors are expected to sustain the Nifty 50's record rally into the next year. However, the wildcard for 2024 is the general elections, with the potential to either boost the index to 25,000 or see it drop to 16,000 if unexpected events occur. iShares MSCI India Small-Cap ETF (SMIN - Free Report) (up 1.9% past week), Nifty India Financials ETF (INDF - Free Report) (up 1% past week), Columbia India Consumer ETF (INCO - Free Report) (up 0.6% past week) are in high momentum (as of Jan 5, 2024).

Japan - Continuing the Momentum

Japan's Nikkei 225 index was the star performer in Asia in 2023, recording a staggering gain of 28%, while the broader Topix index ended 2023 with a 25% increase. Strong earnings and hopes that the Bank of Japan may finally end its long-standing ultra-easy monetary policy have fueled this rally. Analysts expect this momentum to continue well into 2024, with BofA Global Research strategists setting a target of 37,500 for the Nikkei 225 by year-end, as quoted on CNBC.

BofA's top sector picks for the year include technology and banks, as they balance a portfolio with both growth and value-focused stocks. As the Bank of Japan is in the process of unwinding its ultra-easy stance, the challenge lies in managing a slowing economy and cooling inflation.

Investors can keep a close tab on high-momentum Japan ETFs like WisdomTree Japan Hedged Equity Fund (DXJ - Free Report) (up 1.7% past week), WisdomTree Japan Hedged SmallCap Equity Fund (DXJS - Free Report) (up 1.6% past week) and Franklin FTSE Japan Hedged ETF (FLJH) (up 1.1% past week).

Vietnam - A Rising Manufacturing Hub

Vietnam, like India and Japan, has been a beneficiary of the "China plus one" strategy, with companies diversifying their investments to reduce reliance on China. The country expects robust GDP growth of 6% to 6.5% in 2024, driven by strong imports, exports, and increased manufacturing activity. This optimism has led to a 14% surge in foreign direct investments in 2023 compared to the previous year, with $29 billion pledged from January to November.

China accounts for a significant portion of these investments, highlighting Vietnam's appeal as a rising manufacturing hub in Southeast Asia. With valuations considered inexpensive and a daily trading volume on the rise, investors are increasingly drawn to sectors such as consumption, healthcare, real estate, and e-commerce. Experts also anticipate potential inclusion in MSCI's list of emerging market economies in the coming years.

Vietnam ETFs like VanEck Vietnam ETF (VNM - Free Report) and Global X MSCI Vietnam ETF (VNAM - Free Report) should be kept track of.

(Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.)

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