In China’s top annual political gathering, the stocks were higher on Monday, with Japan’s Nikkei surpassing the 40,000 level for the first time. This will overwhelm the financial world of Asia with political and economic activities in 2024.
Since China is a major player in the global economy, during its two-session meeting, it announced boosting economic growth by 5%, with a 7.2% increase in defense budget in 2024. However, it is also expected to see a 3% rise in inflation. After China made these announcements, its stock reached the highest level this year.
Surge in Chip Stocks and Nikkei’s Performance in 2024
Japanese producers of chipmaking equipment rely on a high demand from China, which capitalizes on their chip stock shares to new heights. The world’s largest contract chipmaker was up 5.2% at an all-time high.
The chip companies including Naura Technology Group Co. and Hygon Information Technology are the well known US counterparts. Therefore, the long-term wining of China Chip Stocks are comminating for US.
The Nikkei performance has been on a tear for more than a year. It has also surged more than 20% this year, making it the best performer on the equity index. The recent strong Nikkei’s performance is attributed to a combination of factors including weaker yen, positive market expectations, and strong corporate earnings.
Regional and Global Stock Market Trends in 2024
Although Japan’s Nikkei 225 remains at the top with 40,314.64, its index fell marginally and was up 0.5% to 40,150.00. South Korea’s economy grew by 0.6% during the last four months of 2023, yet it also faced a slight slip this year.
Thanks to its shares in TSMC shares, the Taiwan stock market hit a high. In Australia, the gold futures reached a record high after the speculations of cuts in potential interest rates.
At the same time, the Australian stock market closed at a slight low. In the US, all three major indexes, including the S&P 500 and Nasdaq Composite, experienced a minor decline.
Stock experts consider it an incredible growth rate, with Hong Kong’s Hang Seng index showing a decline of 2.6% and China’s CSI 300 hitting a higher end of 0.7%.
Japan showed a gain in technology-associated markets with strong demands for artificial intelligence.
The Bank of Japan is also boosting the economy through its easy credit policy and supporting more growth. Despite all this, Japan is also experiencing early signs of inflation.
China’s Two Sessions
The China’s Two Sessions held a day after Prime Minister Li Qiang delivered his first government work report. In this event, Xi Jinping and other Communist Party officials joined hands to lead a bloc of nations that were unhappy with the American-dominated world order.
Chinese leaders seek an opportunity to dislodge the West from the center of world affairs and, therefore, will accuse America and its Allies of stoking a new Cold War. China will also criticize America and other rich Western countries for creating a potential barrier to free trade and targeting the future of globalization.
How Will China Address the Problems of Its Economy in 2024?
When China’s economy is weighed down by a property sector crisis and local government debts, how will it propel the markets and sustain its manufacturing activities?
China’s manufacturing activity has been contracted for five straight months. However, the World Bank predicted that China’s economy would grow by 4.5% in 2024 despite weaker domestic demand and rising geopolitical tensions.
Premier Li explained his plan in China’s Two Sessions. China will address the situation by issuing new ultra-long treasury bonds to fund major Chinese projects. According to this strategy
- China will issue $141 billion to implement major national strategies and to enhance its security capacity.
- The Chinese government will allocate 777.3 billion yuan for debt interest payments.
- It will also issue 3.9 trillion yuan special-purpose bonds for local government.
Premier Li also said that the government will create 12 million new jobs to boost income and ensure more support to sectors capable of creating jobs.
Conclusion:
Surpassing 40,000 marks is a historic achievement by Japan’s Nikkei. On the other hand, China’s strategic announcements during its Two Sessions depict its proactive measures to address its geopolitical tensions and economic challenges.