Opportunities in Asian markets, US non-tech sectors in 2024

Busy year for elections and geopolitics may bring short-term volatility and uncertainty

- Lee Su Shyan

An investor does not need to be a Taylor Swift fan but should still grasp the impact she has on the economy. On the opening night of her Eras tour in Arizona in March 2023, the concert resulted in more revenue for local businesses than the Super Bowl, which had been played earlier in February in the same stadium.

Mr James Cheo, chief investment officer at HSBC Global Private Banking and Wealth (South-east Asia and India), used this example to illustrate the need to understand the drivers of the economy. He was speaking at a market outlook event for HSBC Premier Elite customers on Feb 6 held at the Mandarin Oriental hotel.

Mr Cheo noted that 2023 was a year to be invested. China stocks fell 11.2 per cent and oil fell 3.8 per cent, according to HSBC research, but stocks elsewhere and other asset classes showed strong growth.

Apart from the United States technology sector, which delivered 55.1 per cent growth, other examples of positive performance came from hedge funds which were up 4.4 per cent, and British stocks with 14.1 per cent growth. India stocks surged 20.8 per cent.

Mr Cheo said: "The message is that in 2023, if you didn't invest, you would have lost out. Everyone thought that the US was going to crash but the US economy was resilient, with 70 per cent of the economy as consumers. This year, the US economy is unlikely to fall into a recession.

"We see pockets of resilience in Asia; China is not going to collapse and will grow. India is expected to grow around 6 per cent." Asian economic growth rates remain positive. For Asia ex-Japan, the rate is 4.5 per cent.

Another reason for entering the markets now is that markets tend to rally before the first rate cut by the US Federal Reserve.

One misconception is that US stocks are overvalued, but much of the gains in 2023 were driven by the large tech giants, said Mr Cheo.