Asia’s best performing stock markets in H1 2024: Taiwan, Japan top list

Optimism in artificial intelligence drove up Taiwan’s stock market in the first of the 2024, making it the top performing market in Asia-Pacific so far this year.

The Taiwan Weighted Index has surged 28% so far this year, powered by stocks along the AI value chain.

Heavyweight Taiwan Semiconductor Manufacturing Corp climbed 63% in the first half of the year, while its rival Foxconn — traded as Hon Hai Precision Industry — jumped 105% in the same period.

“The performance of global markets this year has been largely driven by the themes of Artificial Intelligence and central bank policy, and that is likely to continue,” said Rahul Ghosh, global equity portfolio specialist at asset management company T. Rowe Price said in the firm’s investment outlook.

The potential and scale of the AI investment cycle continues to drive economic activity globally, he said, adding that the impact of AI investments are broadening out to sectors such as industrials, materials and utilities.

Japan’s benchmark index Nikkei 225 ranked second in the region, after repeatedly surpassing all-time highs earlier this year. In the first six months of the year, the Nikkei has gained about 18%.

The Nikkei smashed past a 34-year record in February, breaching its previous all-time high of 38,915.87, set on Dec. 29, 1989.

Following that, the index surged past the psychological threshold of 40,000, and eventually reached a new all-time closing high of 40,888.43 on March 22.

While Taiwan may lead Asian markets, Japan seems to be the favored market going forward, among analysts who spoke to CNBC.

Ghosh said that improved corporate governance standards continue to have a tangible — and considerable — impact on company performance in the world’s fourth largest economy.

Furthermore, a June 14 note from Ben Powell, chief APAC investment strategist at the BlackRock Investment Institute, pointed out that the Bank of Japan has increasing confidence it will meet its inflation targets, and as such, normalize its monetary policy “in a gradual and measured way.”

Powell said Japan’s macroeconomic backdrop is favorable for risk assets. “We remain overweight Japanese equities, driven by strong corporate reform momentum, healthy earnings and the valuation support from still-negative real interest rates.”

While most Asian markets are in positive territory year-to-date, three stock markets — Thailand, Indonesia and the Philippines — fell into negative territory.

Thailand’s SET Index plunged 8% in the first six months, to be the worst performing index in the region. The Jakarta Composite was down by 2.88% while the Philippine stock exchange index slipped about 0.6% in the same period.

Most central banks in Asia are keeping a close eye on the Federal Reserve’s next move, as they typically make monetary policy decisions…