JPMorgan published the investment outlook for mid-2024, stating that from a valuation perspective, the Asian markets seem attractive. Valuation levels of Asian (excluding Japan) stocks are at historical lows, currently trading at a 35% discount compared to developed markets. They also see potential for earnings growth in Asian companies for the remainder of the year. JPMorgan believes that favorable valuations and earnings growth prospects further enhance the investment attractiveness of this region. Asian (excluding Japan) stock markets have shown strong performance in the first half of 2024. With strong domestic demand and global demand recovery, they believe this market is poised for continued growth in the second half of 2024. A favorable global macro environment, coupled with relatively controlled inflation rates, further support optimistic expectations for this market. Looking ahead, JPMorgan believes that Asian domestic demand will continue to be a strong growth driver and contribute significantly to the region's growth, especially considering that Asia accounts for 60% of the world's population. They suggest that investors should reassess the growth drivers in various Asian markets to capture potential investment opportunities. Riding the wave of strong Asian domestic demand From an economic data perspective, the Indian economy has performed well in 2023 and year-to-date in 2024 (as of May 2024). Since August 2021, India's Composite Purchasing Managers' Index (PMI) has remained above 50, bank credit growth rose by about 16% in the fiscal year 2023, and goods and services tax revenue hit a record high in April 2024. These data indicate strong momentum in economic growth. Looking ahead, JPMorgan expects the Indian government to introduce further policies to strengthen Indian manufacturing. They also anticipate continued growth in public and private capital expenditure, creating a virtuous cycle of growth. For the second half of the year, they believe that India's strong domestic demand will be a key driver of its positive economic outlook. India has seen GDP growth exceeding 8% in the past few quarters, with consumption accounting for around 60.3% of GDP. With a growing population and rising per capita income, demand is expected to continue improving over time. JPMorgan believes that India is at a turning point and expects a surge in non-essential consumption in the latter half of this year, especially in domestically-oriented industries such as transportation, hospitality, jewelry, and automobiles. ASEAN countries also benefit from growing domestic demand and tourism revenue. JPMorgan expects that the recovery of the Chinese economy will further boost the tourism industry in the region. Since reopening, the number of Chinese tourists visiting Southeast Asia has been increasing monthly, and they believe these figures will continue to rise. Malaysia, Thailand, and Singapore have introduced visa-free programs for mainland Chinese tourists, which could significantly contribute to tourism revenue in the region. ASEAN is also expected to benefit from anticipated export growth, particularly in the potential growth of the electronics market. Within ASEAN, the Philippine economy benefits from effective economic policies, a young population structure, and growing private consumption. Indonesia is also set to benefit from continued urbanization, a young population structure, sustained income growth, and the diversification of supply chains. China's domestic economic recovery and export growth In China, economic growth has shown signs of rebound since the first quarter of 2024. Supported by robust export performance and strong manufacturing prospects, GDP grew by 5.3% year-on-year. Looking ahead, JPMorgan is optimistic about China's economic prospects, believing that it will benefit from domestic demand recovery and supportive government policies. From a consumption perspective, key economic indicators such as retail sales, tourism data, and the automotive industry are moving in a positive direction. Additionally, Chinese consumer confidence appears to be recovering. Policymakers are taking gradual measures to support domestic demand, including accelerating government bond issuance and launching consumer product upgrade plans. The government is also strengthening policy support for the real estate industry to clear excess housing inventory. These measures and others indicate the government's intention to support economic stability and domestic demand through regulatory measures. At the same time, the continuous recovery of global (especially Asian) trade is expected to drive China's exports and manufacturing industry. As of the first quarter of 2024, China's exports have been steadily growing year-on-year, and JPMorgan believes that as major economies regain momentum, the external demand for Chinese products is expected to increase, benefiting export-oriented industries. Trade-dependent economies poised to benefit JPMorgan expects that trade-dependent economies like South Korea and Taiwan will benefit from a stronger global economy. In recent months, South Korea and Taiwan have been major beneficiaries of external demand growth, especially in technical exports. Looking ahead, they believe that semiconductor sales and global consumption growth will drive the growth of these economies. South Korea's customs exports and semiconductor exports have been steadily growing in recent months. Additionally, in the case of Taiwan, demand for AI-driven chips has exceeded expectations. JPMorgan expects that Taiwan will continue to benefit from strong global manufacturing activity in machinery and electrical equipment industries. They believe that the optimistic growth prospects of these major trading partners may also boost external demand for technology products, creating a virtuous cycle. Risk-reward situation more favorable While JPMorgan is optimistic about the growth prospects in Asia, they continue to monitor several key risks. Election risks in major Asian economies have largely been resolved in the first half of 2024, but the results of policy implementation are yet to be seen in the second half of the year. Additionally, global economic fluctuations remain another uncertain factor for investors, especially considering the environment of high interest rates in the US over an extended period. Furthermore, the upcoming US election could potentially trigger tensions in global and regional trade situations, and these uncertainties may cause short-term volatility before the end of the year. From a valuation perspective, the Asian markets seem attractive. Valuation levels of Asian (excluding Japan) stocks are at historical lows, currently trading at a 35% discount compared to developed markets. JPMorgan also sees potential for earnings growth in Asian companies for the remainder of the year. They believe that favorable valuations and earnings growth prospects further enhance the investment attractiveness of this region.