Top Performing Asian Stock Markets 2024

Taiwan, Hong Kong, and Singapore stocks have the highest growth this year, while South Korea's has the lowest, according to statistics as of December 23.

Most major Asian stock markets are heading into the final trading days of 2024 with positive growth, supported by central banks easing monetary policy and an artificial intelligence (AI) boom that is boosting tech stocks.

Mike Shiao, chief investment officer for Asia ex-Japan at investment manager Invesco, said Asia has succeeded in reducing inflation faster than the rest of the world, paving the way for monetary easing.

“With the US Federal Reserve (Fed) having started its easing cycle, Asian countries will have more room to cut interest rates in 2025,” he said. Easier monetary policy tends to boost stock prices.

Asia-Pacific's top gainers and losers in 2024. Source: CNBC as of Dec. 23.

Leading the region, Taiwan's Taiex is up 28.85% year-to-date through Dec. 23. Tech-related stocks are the main drivers of the Taiex. TSMC has surged 82.12% this year, while key Apple supplier Foxconn - which trades as Hon Hai Precision Industry - is up 77.51%.

Demand for data centers and AI servers may cool after a surge this year, but demand for AI-enabled mobile phones, PCs and other consumer electronics could rise by 2025, according to DBS Bank.

The Hang Seng Index was second with a 16.63% gain. The Hong Kong Stock Exchange said on October 8 that the market would record new trading records in the second half of 2024, with a volume of $620 billion. This year, Hong Kong ranked fourth in the world for IPOs, raising $83 billion from 66 new listings.

The IPO activity is being supported by leading Chinese companies. Deloitte predicts that the linkages between Hong Kong and mainland capital markets will become increasingly close. Factors such as interest rate cuts in the US, economic stimulus from China and changes in Sino-US trade relations will continue to boost the IPO market.

Singapore's Straits Times (STI) came in third with a 15.84% gain, expected to be Southeast Asia's best-performing stock index this year. The STI hit 3,842 points in the first week of December, marking a 17-year high and close to its all-time high of 3,906 set in 2007.

The STI has been boosted by Singapore's big three banks. DBS shares have risen 41.6% this year, while OCBC and UOB have gained 26.9% and 25.8%, respectively. Excluding these groups, the index would have seen a "single-digit" gain, according to a research note from UOB analyst Adrian Loh.

On the other side of the coin, South Korea has been the worst hit this year. Tech stocks have helped boost Taiwan’s market but have been unable to save the Kospi, which has lost 8.03% as of Dec. 23.

Major economies, especially the US and China, will have a strong impact on the South Korean economy, which is mainly based on exports, said Paul Kim, head of equities at Eastspring Investments, in his 2025 forecast.

The impeachment of President Yoon Suk-yeol also weighed on investor sentiment, said Lorraine Tan, director of Asia equity research at Morningstar. She said the government will play a key role in the market, noting that corporate regulatory reforms, fiscal stimulus and the Bank of Korea’s potential for further interest rate cuts could help improve the business environment and stimulate domestic demand.

Forecasting the outlook for major Asian markets in 2025 , George Maris, chief investment officer at Principal Asset Management, said the two main factors to watch are Donald Trump's presidency and China's economic situation.

Japanese investment bank Nomura said the incoming Trump administration's policies are likely to shape growth and inflation prospects in Asia. Higher tariffs and trade barriers will also weaken exports from Asia. "We expect a tariff increase early next year, leading to higher inflation and slower investment growth," the bank said in an analysis.

Manufacturing- and trade-dependent economies in Asia could be more negatively affected and put downward pressure on growth, according to Freida Tay, fixed income portfolio manager at MFS Investment Management.

Asia is also at risk of facing tighter global financial conditions in 2025, driven by higher interest rates and a stronger dollar. At its last meeting of 2024, the Fed signaled fewer rate cuts next year and raised its inflation forecast.

Nomura predicts that China, Australia, South Korea and Indonesia, which are all exposed to foreign exchange risks, will ease monetary policy in 2025. In contrast, countries with “strong growth, high inflation and easy monetary conditions” will raise interest rates, such as Japan and Malaysia.

Overall, 2025 will be a year of uncertainty, according to experts. Nomura said “turmoil awaits” the region, while strong demand for AI and rising exports could support growth in the first quarter. However, challenges will emerge in the second quarter, due to the impact of the Trump presidency, China’s overcapacity and a slowing semiconductor cycle.

Against this backdrop, economies with strong domestic demand such as Malaysia and the Philippines will remain growth bright spots, while India, Thailand and South Korea may struggle.