Asia-Pacific Stocks Finish 2024 on Positive Note, but Uncertainties Loom for 2025

Analysts say Trump's presidency and China's economy will be key to determining the direction of the Asian markets in 2025.Asia-Pacific stocks had a good run in 2024, with most major markets ending the year in positive territory, as the region's central banks eased monetary policy while an AI boom lifted tech stocks., said Mike Shiao, chief investment officer for Asia ex-Japan at investment management firm Invesco, paving the way for monetary easing.

While tech stocks helped lift Taiwan, they couldn't save South Korea, which was the only major Asian market to end the year in negative territory. The country's "Corporate Value-up program" appears to have failed to boost stocks, with tariff fears andMajor economies, particularly the U.S. and China, will greatly impact South Korea's exports-driven economy, Paul Kim, head of equities at Eastspring Investments, said in the firm's 2025 outlook.

Kim also said that the government will play a key role in the country's markets, highlighting that potential reforms in corporate regulations, fiscal stimulus measures and the possibility of further rate cuts by the Bank of Korea could help the business environment and stimulate domestic demand.

Manufacturing and trade-dependent economies, such as those in Asia, will likely be more negatively impacted, "as tariffs lead to reduced trade flows and put downward pressure on growth," Freida Tay, institutional fixed income portfolio manager at global investment manager MFS Investment Management told CNBC.

On the other hand, countries that have "strong growth, higher inflation and still accommodative monetary conditions" will hike rates, such as Japan and Malaysia.

Nomura analysts expect more stimulus from China to support its economy, while highlighting that Beijing needs to stabilize its embattled property market, fix its fiscal system, beef-up social welfare support, and ease geopolitical tensions in order to "achieve a real, sustainable recovery."

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Asia-Pacific Stocks Finish 2024 Strong, But 2025 Outlook Remains UncertainDespite a strong performance in 2024, driven by easing monetary policy and the AI boom, the outlook for Asia-Pacific markets in 2025 remains uncertain. While most major markets closed the year in positive territory, South Korea was the only exception, experiencing a significant decline. The direction of the U.S. and China's economies, along with the potential impact of the impeachment of South Korean President Yoon Suk Yeol, are key factors that will shape the region's performance next year.
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