Asian Stocks Eye Soft Start Ahead of China Data: Markets Wrap

Asian markets are set for a soft start on Monday, with investors keeping a close eye on China's economic data due later in the week. The region's equities have been volatile in recent weeks, with geopolitical tensions and trade dynamics continuing to influence performance.

Technological advancements, particularly in AI and semiconductors, are expected to play a significant role in driving Asian stock market growth in 2025. In 2024, Taiwan led the Asian region in terms of stock market performance, boosted by AI-driven earnings growth. This trend is likely to continue in 2025, as AI continues to be a major growth driver for the region. Nvidia's stock rallied in 2024, driven by the AI chip trade, and is expected to continue its upward trajectory in 2025. Eastspring Investments emphasizes long-term growth drivers such as increased capital expenditure, decarbonisation, and supply chain diversification, along with AI and semiconductors, poised to drive higher earnings in the region.

Geopolitical tensions and trade dynamics continue to influence Asian stock market performance. The International Monetary Fund (IMF) highlights that rising geopolitical tensions present growing risks for Asia in 2025. For instance, the political chaos in South Korea in late 2024 led to a temporary dip in the Kospi index, but it quickly recovered. Trade dynamics, particularly the U.S.-China trade relationship, will continue to impact Asian markets. In 2024, the Biden administration blocked a proposed deal between U.S. Steel and Japan's Nippon Steel, citing national security concerns. This decision highlights the ongoing trade tensions and their potential impact on Asian markets. Additionally, the incoming Trump administration in 2025 may bring further changes in trade policies, which could affect Asian stock market performance.

Domestic demand and intra-regional trade are expected to drive Asian stock market growth in 2025. Domestic demand in Asia is expected to strengthen in 2025 as the effects of earlier monetary tightening wane. Increased intra-regional trade driven by China's economic recovery will enhance exports and consumption in 2025. The recovery of global trade and tourism will be a key growth driver for ASEAN markets in 2025. Countries like Singapore and Malaysia are well-positioned to benefit from increased FDI and export growth.

In conclusion, Asian stock markets are expected to have a soft start on Monday, with investors focusing on China's economic data due later in the week. Technological advancements, geopolitical tensions, and trade dynamics are all factors influencing Asian stock market performance. Domestic demand and intra-regional trade are expected to drive growth in the region in 2025. Investors should keep a close eye on these factors as they navigate the dynamic Asian markets.