"China has seen strong performance, particularly following the introduction of policy support, despite the outlook being complicated by the housing market, debt overhang, and weak consumer confidence. India remains the fastest growing major economy in the world, supported by a combination of growth and disinflation, strong profits, and megatrends including digitalisation, infrastructure, and demographics," Little said. Elsewhere, an upswing in the semiconductor cycle improves his outlook for Taiwan and Korea.  

Regarding the fixed income market, following defaults in the Chinese real estate sector, Kondo believes that the proportion of real estate in the Asian credit universe has decreased, leading to a wider range of higher-quality and more diversified issuers in the market. Kondo thinks that Asian investment-grade bonds will provide attractive income with lower volatility in the face of future macroeconomic uncertainty than comparable bonds in developed markets. For example, India's drive to increase renewable energy is continuing to offer attractive opportunities to harvest favourable yields through investment in utilities' sector bonds.

Little also thinks that parts of the emerging market fixed income universe look attractive, particularly India, Indonesia, and Mexico, with strong medium-term performance supported by solid fundamentals, including strong growth and improved policy credibility, as well as cheap valuations. "Approaching interest rate cuts from the Federal Reserve and a weaker dollar should also support this space," Little said.

Wrapping up, Kondo highlighted three Asian investment themes for the second half of 2024: artificial intelligence, with Taiwan tech stocks lagging global peers by around 20 per cent in valuation; corporate governance, as Japan’s successful experience in implementing corporate reforms during 2023 may broaden to other Asian markets such as China and Korea; and India’s growth potential, which should not be underestimated.

India
With India’s GDP forecast to increase at an average of 6.5 per cent annually over the next five years, Dina Ting, head of global index portfolio management, , is also optimistic that this diverse and dynamic economy can potentially realise a multi-decade growth story, perhaps with even hardier democratic checks in place.

“India’s equity markets are also well-diversified across sectors and company types that potentially offer an elevated growth outlook and opportunities driven by domestic consumption and emerging industrial prowess,” Ting said. “Financials hold the largest share, followed by significant consumer discretionary, industrial, energy and technology weightings. The market also offers good exposure to consumer staples, utilities and healthcare names.” See more commentary about India here.