Taiwan outpaces Asia-Pacific markets with over 30% jump in 2024; what next?

Taiwan on top: In 2024, Taiwan’s stock market, represented by the TAIEX, stood out as one of the top performers among other Asia-Pacific peers, surging a whopping 30.3 per cent until December 24, Bloomberg data showed. The standout growth in Taiwan's stock market was largely driven by the country's critical role in the global semiconductor supply chain, according to analysts.

 

In comparison, Japan’s Nikkei rose 17.4 per cent, Hong Kong’s Hang Seng climbed 18.6 per cent, and China’s CSI300 advanced 16.2 per cent. Other regional markets, such as Australia’s ASX200 and India’s Nifty50, saw more modest gains of 7.6 per cent and 9.2 per cent, respectively. Meanwhile, South Korea’s Kospi, bucking the trend, dropped 8.8 per cent. In an unexpected twist, Pakistan’s Karachi 100 index soared a staggering 84.87 per cent.

 

Why did Taiwan see such a rally in 2024? 

  Taiwan’s dominance in the chip-making industry has amplified on the back of a sustained recovery in global demand, especially fueled by the rapid advancements in artificial intelligence (AI), electric vehicles, and 5G technologies.

 

Anirudh Garg, partner and fund manager at Invasset PMS, explained that Taiwan’s chipmakers were major beneficiaries of this surge, particularly as geopolitical shifts reshaped the global supply chain. 

 

"Geopolitical tensions and the desire to reduce dependence on Chinese suppliers led to increased demand from the US and Europe," Garg noted.

 

Taiwan’s leading semiconductor companies, such as Taiwan Semiconductor Manufacturing Company (TSMC), were at the heart of this shift. These companies saw their stock prices soar as the world’s insatiable demand for chips drove their earnings to new heights. Garg added that Taiwan’s government also played a role in this success by implementing strategic policies aimed at fostering tech innovation and manufacturing, which further boosted investor confidence.

 

Alongside these sectoral strengths, Taiwan’s broader economic environment remained stable, with a rebound in exports and strong foreign institutional inflows that amplified the rally. Favourable currency movements also provided a tailwind, propelling the market even further. The growth in AI, coupled with Taiwan’s central role in semiconductor production, set the stage for what was undeniably a year of exceptional performance for the TAIEX.

 

Shrisha Acharya, vice president at Anand Rathi Global Finance pointed to two dominant global trends that shaped 2024’s market performance, which include the rapid rise of AI and central bank policies, both of which were crucial for Asia-Pacific equities. 

 

“Taiwan’s Taiex emerged as the frontrunner, gaining 28.85 per cent by December 23,” Acharya noted. 

 

While the performance of markets like Hong Kong’s Hang Seng Index was commendable, Taiwan’s technology-heavy index far outpaced regional competitors. A major portion of this success was driven by the explosion in AI-driven technology stocks, including leading Taiwanese firms like TSMC and Hon Hai Precision Industry (Foxconn), a major supplier to Apple. These companies saw stellar gains, with TSMC’s stock up by 82.12 per cent and Foxconn climbing 77.51 per cent.

 

What next for global markets in 2025?

 

In 2025, global markets, analysts believe, will navigate shifting dynamics amid geopolitical unrest and economic uncertainty. Key factors include the potential return of Donald Trump as US president and China's economic trajectory. Trump’s trade policies and potential retaliatory actions from China could create volatility, particularly for Asia’s export-driven economies.

 

Asia will also face tighter global financial conditions due to elevated US interest rates and a strong dollar. Countries like China, South Korea, and Indonesia may cut rates to spur growth, while Japan and Malaysia could adopt tighter policies supported by strong domestic growth.

 

According to analysts, Asia-Pacific markets may find growth through infrastructure investments, trade partnerships like Regional Comprehensive Economic Partnership (RCEP), and rising domestic consumption in countries such as India and Indonesia. Taiwan and South Korea are expected to benefit from advancements in AI and green energy.

 

Geopolitical tensions, especially US-China relations, remain a concern. However, the shifting global supply chain may present opportunities for innovation and growth. Technology, green energy, and infrastructure are anticipated to be defining sectors. While political uncertainty and financial pressures pose challenges, Asia’s technological edge and strategic investments are likely to drive momentum in 2025.

 

Why Indian markets underperformed and what lies ahead for India in 2025?

 

According to Ambrish Baliga, an independent analyst, Indian markets have underperformed recently due to revised GDP numbers, high inflation, and sluggish earnings. While Q1 earnings hinted at a slowdown, Q2 confirmed weaker economic growth, raising doubts about Q3. Macroeconomic indicators, including inflation and GDP revisions, highlight ongoing challenges. 

 

Looking ahead to 2025, Baliga predicts subdued sentiment influenced by geopolitical uncertainties, weak earnings expectations, and global events. He forecasts modest market gains of around 10 per cent for 2025, with sectors like chemicals, infrastructure, pharmaceuticals, and fast moving consumer goods (FMCG) expected to outperform amid broader economic challenges.