At the beginning of the year, few could have predicted that by 2024 a multitude of countries would witness their stock markets reaching unprecedented highsThe driving forces behind this wave of market exuberance are varied, with the United States leading the charge, buoyed by the surging interest in artificial intelligence and the Federal Reserve's decision to lower interest ratesOn the other side of the Atlantic, Europe's stock markets have surprised many investors with their robust performance despite a meager economic growth rateThe outlook for the French market in the latter half of 2024 stands as a significant gauge for stakeholders watching the European economic landscapeAs for Japan, after languishing for over three decades, its stock market has seen a slow yet constant rise in recent years, culminating in a historic peak in 2024. Still, the common challenge faced by several Asian markets, such as India and South Korea, is the withdrawal of foreign investment.

In the American markets, Argentina dazzles while the U.S

market becomes the object of desire.

After an eye-popping 360% surge in 2023, the Argentine stock market has once again crowned itself as the world's champion with an additional 172.5% increaseThe economic performance of Argentina under President Javier Milei has attracted global investor attention, thanks to stringent fiscal austerity measures and a drastic cut in public spending that managed to yield a budget surplusHowever, alongside this fiscal success, the poverty and unemployment rates surged alarminglyDespite Milei’s administration's efforts to rein in inflation—still astonishingly high at 112% in November—Argentina's claim to the title of top-performing stock market is significantly undercut by these economic hardshipsSimilarly, Venezuela's stock market has also doubled for three consecutive years, yet its domestic inflation remains alarmingly escalated.

The U.S

stock market has rightly claimed its position as the leader of global indicesWith liquidity plentiful due to the Federal Reserve’s interest rate cuts and a continuing exuberance over artificial intelligence that has benefited tech companies, the three major U.Sstock indices have reached new highs more than 100 times throughout the yearTech stocks, particularly the so-called "Magnificent Seven"—comprising Apple, Microsoft, Google, Tesla, Nvidia, Amazon, and Meta Platforms—continue to dominateAdditionally, consumer and financial sectors have also produced significant gainers this year.

Looking ahead to 2025, optimism about the U.Sstock market is prevalent among analystsTeams from various financial institutions—including Deutsche Bank, Goldman Sachs, UBS, Barclays, Société Générale, and JPMorgan—are advising investors to focus on American markets next year, with technology stocks still designated as the top choice

Furthermore, expectations surrounding the incoming presidential administration suggest many more investment opportunities, especially in the financial, manufacturing, and energy sectors that could see deregulationOil-related energy companies might benefit from supportive policies, and the financial sector may be the largest beneficiary of these changesNotably, the corporate tax rate is anticipated to drop significantly from 21% to 15%, potentially providing a substantial boost to smaller public companies.

However, there is a growing chorus of pessimism emergingThe pace of interest rate cuts from the Federal Reserve is no longer as resolute as in the previous year, raising critical questions regarding whether large tech companies can meet the soaring expectations set by the market—this will likely be the deciding factor in how far the market can journey forward.

European markets: Germany and France diverge.

As we step into 2024, Europe is wrestling with high inflation yet is gradually recovering, albeit with continued economic duress

alefox

Encouragingly, under the stimulus of ongoing interest rate cuts from the European Central Bank (ECB) and the Bank of England, stock markets in key nations such as Germany, France, and the United Kingdom still achieved record highsHowever, the two economic powerhouses of Europe, Germany and France, begin to drift apart in the latter half of the yearThe DAX 30 index in Germany experienced a robust growth of 18%, maintaining its upward trajectory from start to finishIn stark contrast, the French CAC 40 index, after peaking mid-year at 8295 points, deflated to end up with a total decline of 2.15% for the year.

The instability within the political landscape remains a key hurdle for the French marketDuring this year, France has seen the turnover of four prime ministers, and the current one, François Bayrou, has struggled to stabilize the budget deficit with fiscal initiatives that produced limited results

Investor skepticism regarding policy implementation has heightened, a sentiment mirrored in the rising 10-year government bond yields which surged over 3%—the highest level since the eurozone's debt crisisThe climbing financing costs are exacerbating corporate strains and negatively influencing investor sentiment within the equities markets.

In recent developments, Moody’s downgraded France’s credit rating, indicating a notably deteriorating economic outlook which has further fueled concerns regarding the stability and sustainability of French policiesRoland Kaloyan, the head of European equity strategy at Société Générale, remarked that the complexity of current market factors has made investors wary, a situation previously unseen.

The enduring military conflicts of the region show no signs of abating, rendering the respective markets of the warring nations as collateral damage

Although Russia's economy remains comparatively robust, inflation has persistently surged, forcing the Central Bank of Russia to significantly hike its benchmark rates consecutivelyThe Russian RTS index has dropped 17% in this year, while Ukraine’s index has faced an even more drastic decline of 29%, ranking them near the bottom of European market performancesAbsence of conflict would often equate to lesser harm.

Asian markets: Mixed fortunes.

The stock markets of Japan and South Korea in 2024 convey to investors a story of duality; one path is paved with prosperity while the other is fraught with challenges.

Japan’s stock market, despite experiencing a striking 12% single-day drop mid-year, managed to rally and end the year with a notable 19.22% upsurge, setting a historic high of 42,426 pointsMore importantly, Japan's market is recovering lost ground dating back 40 years; following the collapse of its asset bubble in 1990, both the equity and real estate markets had been in decline for approximately three decades

However, a resurgence was observed in the last decade, with 2024 witnessing a significant acceleration in asset appreciation.

The weakened yen has helped improve profits for export-oriented firms, that coupled with aggressive stock buyback programs from listed corporations, have significantly contributed to the stock price increasesHowever, it’s worth mentioning that even with the initial enthusiasm amongst international investors previously showcased by interest from figures such as Warren Buffett, signs of continuous withdrawal by foreign capital from Japan’s stock market are concerningIn 2024, foreign investors net sold over 5 trillion yen, contrasting sharply with the net purchases of 6 trillion yen observed in 2023. Such shifts raise questions about the viability of Japanese stock market prospects in 2025. Speculations regarding interest rate hikes by the Bank of Japan, alongside uncertainties pertaining to the U.S

economy, might further exacerbate dollar-yen exchange rate volatility, which poses increased investment risks.

While Japan's exuberant market performance glows brightly, the neighboring South Korean stock market plunges into despairRecording the weakest performance amongst major Asian and global markets, the South Korean composite index fell by 9.63%, with the tech-heavy KOSDAQ suffering a staggering drop of 21.73%. Market performance has been significantly impeded by heavyweight tech stock giants like Samsung Electronics, alongside an ongoing outflow of foreign investments that has eroded investor confidenceData from November 2024 indicates that foreign investors net sold 4.15 trillion won's worth of stocks in Korea, marking four consecutive months of net selling, with an additional 2.4 trillion won sold within two weeks following December's onset.

In a fascinating twist amidst stock market sluggishness, South Korean residents continue to display a fervent interest in cryptocurrency

Amid a backdrop of a staggering 30% of the nation’s population now engaged in cryptocurrency trading, the Bank of Korea reported that by November 2024, the number of domestic cryptocurrency investors soared to 15.59 million, with a remarkable increase of 610,000 individuals within just a monthThe daily trading volume on the five major exchanges—UPbit, Bithumb, Coinone, Korbit, and GOPAX—rose dramatically from 3.4 trillion won in October to a staggering 14.9 trillion won in November, signifying a trebling of activity, a trend reminiscent of previous bull marketsIndeed, South Koreans have long shown an enthusiasm for investing in cryptocurrency; during the first bull run in 2017, roughly 5% of the population participated, this figure surged to 10% in 2021, and now stands at 30%.

It stands to reason that losses endured by South Korean stock investors could potentially be recouped within the cryptocurrency realm.

Across other significant Asian markets, India continues to reach new stock market heights

The Nifty50 and Sensex indices have increased by 8.8% and 8.2% respectively this year, marking the ninth consecutive year of growthThe influx of retail and institutional investors, along with the continuity in policies under the ruling party, has allowed Indian markets to advance steadily.

However, following its record highs, India's stock market now contends with pressures of overvaluation and capital outflowsThroughout October, foreign institutional investors significantly withdrew over $10 billion, the largest single-month outflow ever recordedAs the dollar regained strength, Asian currencies face depreciation, and India's stock market also felt the impact of fund withdrawalsCitigroup downgraded its rating on Indian stocks citing concerns over profit growth prospectsBy December, while foreign investment continued to see outflows, local investor enthusiasm began to revive, with more retail investors entering equity markets in aspirations to achieve their financial ambitions