admin
The year 2024 demonstrated a remarkable resurgence in global financial markets, characterised by resilience and renewed optimism following the challenges of previous years.
Equity markets outperformed across the board, buoyed by strong economic fundamentals, technological advancements, and region-specific policy measures.
Developed market equities led the charge, with the MSCI All Country World Index delivering an impressive total return of 19,2 percent (US dollar), driven primarily by the robust performance of the United States and the meteoric rise of mega-cap technology stocks centered around artificial intelligence (AI).
While under-performing developed peers, emerging markets still delivered a commendable 8,1 percent (US dollar), supported by a late-year rally in Chinese equities and strong gains in economies such as India and Taiwan.
Commodities posted more subdued returns at 5.4 percent (US dollar), as weak demand from China weighed on prices. However, gold shone brightly with a stellar 27.1 percent (US dollar) gain, reflecting heightened concerns over US fiscal policy and persistent geopolitical uncertainties.
In contrast, fixed-income markets struggled, with global investment-grade bonds returning -1,7 percent (US dollar) amid rising yields and a stronger US dollar. Central banks worldwide grappled with monetary policy normalisation, leading to divergent regional economic trajectories.
United States
The US economy reaffirmed its position as a global growth engine, posting robust real GDP growth of 2.6 percent quarter-on-quarter annualised.
This resilience was fuelled by strong consumer spending, a healthy labour market, and resilient corporate earnings. US equities outperformed globally, with the S&P 500 Index achieving a total return of 25 percent (USD), while the Nasdaq Composite soared 29.6 percent (USD).
A key driver of this performance was the “Magnificent Seven” mega-cap technology firms, which collectively gained 67.3 percent in 2024 and now account for 34.6 percent of the S&P 500’s market capitalisation, or US$16 trillion of its US$46 trillion total.
This dominance highlights the transformative impact of AI technologies, which continue to reshape industries.
Beyond technology, financial stocks contributed significantly, supported by optimism over potential deregulation following the US elections. Notable sector performance included Communication services (+40,2 percent), technology (+36,6 percent) and financials (+30,5 percent), while materials (-0.04 percent) and healthcare (+2.6 percent) lagged.
The Federal Reserve’s measured approach to policy normalisation, focusing on a balanced calibration of interest rates, further bolstered market sentiment and ensured broader economic stability.
Europe
Europe faced a more challenging landscape in 2024, with economic momentum hindered by high energy costs, regulatory challenges, and slowing manufacturing activity in key economies such as Germany and France.
European equities posted an 8.1 percent return (EUR), well below US benchmarks. However, peripheral European bonds outperformed core markets, benefiting from expectations of future rate cuts by the European Central Bank.
The energy sector continued to struggle as the transition to renewables encountered logistical and financial obstacles.
Asia
Asia offered a mixed but notable performance, with Japan emerging as a standout performer. Japanese equities returned 20,5 percent (JPY), bolstered by corporate governance reforms, rising real wages, and a weaker yen that enhanced export competitiveness.
China saw a late-year rally in equities (+19.8 percent USD), driven by stimulus measures and signs of recovery. Nonetheless, ongoing concerns about the property market and weak consumer sentiment tempered optimism. South Korea and Taiwan also delivered strong returns, leveraging their strategic positions in the global semiconductor supply chain.
Emerging markets
Emerging markets achieved an 8.1 percent return (USD), bolstered by strong performances across Asia.
Chinese equities staged a notable late-year rally, climbing 19.8 percent (USD) on the back of cohesive policy measures designed to stimulate economic growth.
Key initiatives included fiscal stimulus, real estate sector support, and efforts to enhance consumer confidence.
However, lingering challenges such as subdued consumer sentiment and instability in the property market tempered overall optimism.
India and Taiwan also delivered standout results, propelled by structural reforms, robust domestic consumption, and sustained global demand for technology exports.
South Africa
South African markets delivered a mixed performance. Domestically focused equities within the FTSE/JSE Capped SWIX Index rose 21 percent, reflecting improving economic sentiment.
In contrast, resource stocks, particularly platinum miners, struggled with a 26 percent decline (ZAR) due to weaker commodity prices.
Outlook for 2025
The US is expected to sustain healthy growth in 2025, with real GDP forecasted at 2.5 percent. Inflationary pressures are easing, and the labour market remains stable. Analysts anticipate continued stock market gains, with projections for the S&P 500 ranging from 10 percent to a bullish 25 percent increase.
Artificial intelligence will remain a defining theme, transitioning from an initial surge to a foundational technology. Broader market participation across sectors is expected, potentially creating a healthier investment landscape.
Globally, 2025 is likely to bring diverse opportunities and challenges. A key theme will be greater variability across regions, sectors, and investment styles, fostering a more dynamic and diversified market environment. — Moneyweb
Online Reporter