Year-end Review of Global Stock Markets: Besides the US Stock Market, These Markets Are Also Impressive

Since the beginning of this year, driven by the artificial intelligence (AI) boom and technology stocks, the U.S. stock market has become the "most eye-catching" among major global stock markets, with the S&P 500 index rising over 26% year-to-date.

However, when investors look globally, there are other stock markets worth paying attention to. In fact, under the pressure of multiple uncertainties, benefiting from the global economic recovery, global stock markets have performed well in 2024. Data shows that the MSCI Global Index has increased by as much as 17.1% since the beginning of 2024. Among them, developed markets lead the way, with the MSCI Developed Markets Index rising by 18.9% and the MSCI Emerging Markets Index rising by 6.8%.

This article will mainly analyze the stock markets of Germany, Japan, Italy, and Singapore in developed markets, as well as those of Venezuela, Sri Lanka, Kazakhstan, Argentina, and Pakistan in emerging markets. These stock markets have achieved impressive gains in 2024, bringing good returns to investors.

Developed Markets

This year, the developed markets with better stock market performance include Germany, Japan, Italy, and Singapore. The rebound in these stock markets has various reasons. From the perspective of economic fundamentals, Germany and Japan's economic performance has been poor, leading to a divergence in stock market performance, while the economic recovery in Italy and Singapore has been a key factor driving stock market increases.

Germany

Data shows that as of December 26 this year, the German DAX 30 index has risen by 18.49% and has repeatedly set new historical highs, far exceeding the approximately 5% increase of the pan-European Stoxx 600 index during the same period.

In stark contrast to the strong performance of the German stock market is the continued economic downturn in Germany. The German federal government recently lowered its economic growth forecast for 2024 from 0.3% to -0.2%, indicating that the German economy will shrink for the second consecutive year. In response, Timothy Lewis, a portfolio manager at JP Morgan Asset Management, stated that the performance of the DAX 30 index is "surprising," fully confirming the saying that "the stock market and economic performance do not always align."

Analysts point out that despite the economic downturn, several factors supported the rise of the German stock market this year, including low expectations at the beginning of the year, exposure to the U.S. market, and the upcoming early elections. Sabrina Reeh, a senior portfolio manager at DWS, noted that at the beginning of this year, the valuation of the German stock market was relatively low, and sentiment was weak, but corporate earnings ultimately "exceeded expectations."

At the same time, the success of the German stock market this year is also related to its exposure in the U.S. Data shows that the DAX 30 index tracks 40 blue-chip stocks, of which less than a quarter of the total revenue comes from the German domestic market, thus limiting the negative impact of the domestic economic downturn. Maximilian Uleer, head of European equities and cross-asset strategy at Deutsche Bank, stated: "The revenue share of DAX 30 constituent companies in the U.S. is higher than in Germany." "Despite concerns about potential tariffs, a large portion of the revenue is locally produced and may not be affected by tariffs."

Therefore, it seems fair to say that the German stock market is benefiting from economic recovery, albeit from the U.S. economy rather than Germany's own economy.

The sudden collapse of the German government in November was largely unexpected, but analysts believe this development could be a positive factor for the German stock market. Maximilian Uleer stated, "From a market perspective, early elections are seen as an opportunity for more structural reforms and increased spending, whether through changing government spending priorities or increasing the fiscal deficit."

Sabrina Reeh mentioned how early elections could help boost overall sentiment in the German stock market. She pointed out that it is still unclear how many parties will form the next government, but relaxing regulations and easing debt limits could help improve market sentiment. It is reported that Germany is currently discussing relaxing the debt brake, and it remains unclear how much more the German government is willing to spend, but the overall trajectory suggests that more stimulus measures will be forthcoming.

It is worth mentioning that the German stock market also has its own "seven giants," namely software giant SAP, defense stock Rheinmetall, industrial group Siemens, Siemens Energy, Deutsche Telekom, and insurance companies Allianz and Munich Re. Among them, SAP alone has contributed nearly 40% of the increase in the German DAX 30 index this year. Driven by corporate clients shifting to cloud computing and the company's push for embedding commercial artificial intelligence into core business processes, SAP's stock price has risen over 70% this year.

Other companies driving the German DAX 30 index's strong performance this year have benefited from various favorable factors. Defense stock Rheinmetall's stock price has risen 107% this year due to rising expectations for European defense spending; Siemens Energy's stock price has increased by 329% due to growing demand for renewable energy. The weakening euro has also boosted German export-oriented listed companies. Since the end of September, the euro to dollar exchange rate has fallen from 1 euro to 1.11 dollars to 1 euro to 1.04 dollars.

For Germany, after a strong rebound in 2024, some favorable factors for the German stock market are expected to continue into 2025, including the relatively loose monetary policy in the eurozone and the reallocation of international funds, and the new German government that comes to power after the early elections may introduce new stimulus measures. However, the policies of the Trump administration are "a key factor to watch." The German central bank has also warned that the German economy is highly dependent on exports, and Trump's tariff threats could cause significant damage to the German economy, which could weigh on the German stock market. In addition to tariff risks, uncertainties such as potential political turmoil and geopolitical disturbances also need to be noted Japan

The Japanese stock market also performed well in 2024, continuing the upward trend from 2023. As of December 26, 2024, the Nikkei 225 index has risen nearly 19% year-to-date, and the TOPIX index has increased over 16%, both reaching historical highs within the year, outperforming the Morgan Stanley Capital International (MSCI) Asia-Pacific Index.

The Japanese economy seems to have shown some signs of recovery this year. Notably, Japan has finally welcomed the long-desired inflation. Since April 2022, Japan's CPI year-on-year growth has consistently exceeded the Bank of Japan's target level of 2%.

However, overall, Japan's economic performance this year cannot be considered good. Influenced by factors such as the depreciation of the yen, rising energy and labor costs, domestic inflation in Japan remains high, and economic recovery is weak.

According to the latest revised data released by the Cabinet Office of Japan on December 9, 2024, in the first quarter of 2024, due to a decline in both domestic and external demand, Japan's economy contracted by 0.6% quarter-on-quarter. In the second and third quarters, external demand continued to show negative growth, but due to a slight recovery in domestic demand, the economy showed a slow rebound, with actual GDP quarter-on-quarter growth rates of 0.5% and 0.3%, respectively. The Japan Economic News Agency's comprehensive database NEEDS predicts that in the fourth quarter, Japan's economy is expected to maintain a slow recovery momentum, with a quarter-on-quarter increase of 0.3%.

Keio University professor Sayuri Shirai pointed out that although the latest report released on December 9 revised up the economic growth data for the third quarter, the personal consumption data was revised down and has not even returned to the levels of the first quarter of 2019 before the pandemic. Overall, domestic demand remains quite weak.

Toshihiro Nagahama, chief economist at Dai-ichi Life Research Institute, believes that for Japan's economy to achieve positive growth in 2024, the actual GDP year-on-year growth rate in the fourth quarter must reach nearly 1.3%, which is a very high threshold. In other words, he believes that Japan's economy may experience negative growth this year.

In October of this year, the International Monetary Fund (IMF) lowered its 2024 economic growth forecast for Japan to 0.3% in its World Economic Outlook report, the lowest since 2020, a reduction of 0.4 percentage points compared to the forecast released in July this year In addition, according to a report from the Japanese Cabinet Office, the Japanese economy has shown insufficient demand for five consecutive quarters. Itochu Research Institute believes that the pace of price increases in Japan has slowed this year, but consumer confidence has not yet improved. Although the Japanese government has been working to promote wage increases in recent years, overall wage growth has not kept pace with price increases, and personal consumption, which is a major pillar of domestic demand, has remained weak in its recovery. The survey results released by Japan's Ministry of Internal Affairs and Communications on December 6 showed that, as of October, real household consumption in Japan had declined year-on-year for three consecutive months. Yoshihiro Nagahama pointed out that the main reason for the difficulty in recovering personal consumption in Japan is the continuous decline in real wage levels, which is also related to the public tightening their wallets and reducing consumption.

Although the economic recovery is weak, the Japanese stock market has seen considerable gains this year, driven by various factors, including the continued improvement in expectations for the effectiveness of corporate governance reforms in Japan and the depreciation of the yen.

Under the promotion of the Tokyo Stock Exchange, Japanese listed companies, especially those listed on the main board, are actively improving capital efficiency to enhance stock price performance. In recent years, an increasing number of Japanese companies have announced measures to improve governance efficiency, such as strengthening management, reviewing business portfolios, and enhancing shareholder returns. Among the many measures to improve fundamentals, the significant increase in share buyback actions is particularly noteworthy. From the beginning of this year to mid-November, Japanese listed companies announced plans to repurchase shares amounting to 16 trillion yen, which is 1.7 times the record share buyback amount for 2023.

In addition, a number of activist investors, including Elliott Investment Management, the world's largest activist hedge fund, Oasis Management, and Japanese domestic investors known as "Japan's retail stock god" Yoshiaki Murakami and Strategic Capital Inc., have purchased a record value of at least 1 trillion yen (approximately 6.6 billion USD) worth of Japanese stocks this year, acquiring stakes in over 146 companies. Under the pressure from activist investors, the improvement in corporate governance in Japan has reassured investors.

Data shows that the Tokyo Stock Exchange's value stocks have risen 19% so far this year, outperforming the 11% increase in growth stocks, due to the actions of activist investors and the ongoing corporate governance reforms promoted by the Tokyo Stock Exchange, which have driven companies to enhance shareholder returns. Junichi Takayama, Chief Investment Officer at Nikko Asset Management, stated, "The overall market rebound is driven by value." "Companies are now more focused on enhancing shareholder value."

Analysts also added that the normalization of monetary policy is one of the key factors driving the rise of the Japanese stock market this year. The Bank of Japan implemented its first interest rate hike since March 2007 this year, exited its negative interest rate policy, and raised rates again in July. Among them, insurance stocks and bank stocks performed well, as the market expects that the profits of insurance companies and banks will benefit from rising borrowing costs Data shows that so far this year, the Tokyo Stock Exchange Insurance Index has risen by more than 56%, while the Bank Index has increased by over 46%, both significantly outperforming the overall market.

Market participants point out that in the next one to two years, with demand gradually recovering, a financially accommodative environment, and economic stimulus policies working together, the outlook for the Japanese economy is expected to show a trend of gradual improvement. However, due to factors such as fluctuations in the international situation and insufficient momentum for sustained domestic demand recovery, the uncertainty surrounding Japan's economic recovery remains strong, and the path to recovery may be quite bumpy.

Looking ahead to 2025, most analysts are optimistic about the performance of the Japanese stock market. Analysts believe that the valuation of Japanese stocks remains reasonably neutral, and the inflation outlook for the Japanese economy can support the continuation of a structural bull market in Japanese stocks. Additionally, improvements in corporate governance in Japan also exhibit a tiered effect; after the governance improvements of large enterprises, subsequent small and medium-sized enterprises are expected to follow suit, thus continuing to release positive signals.

Erin Browne, Managing Director and Portfolio Manager at bond giant Pacific Investment Management Company (Pimco), stated that the Nikkei 225 Index and the Tokyo Stock Exchange Index have remained stable over the past few months as investors seek clearer information regarding the Bank of Japan's policies and tariffs. Nevertheless, structural tailwinds such as corporate governance reforms and the initiation of a virtuous "wage-price" cycle still exist, valuations are not high, and Japan does not face new long-term challenges similar to those in Europe, making the Japanese stock market relatively attractive among non-U.S. developed markets.

Erin Browne added that Japanese stocks did not react significantly to Trump's election victory, possibly because Japanese companies have established a relatively high proportion of their supply chains in the U.S. to serve American customers. She noted that a survey of fund managers shows they are still observing the market but are ready to continue investing in Japanese stocks once these issues become clearer, indicating that the Japanese stock market is expected to continue rising in 2025.

Goldman Sachs also stated in its 2025 Japan Economic Outlook report that it remains optimistic about the Japanese stock market within the global stock market. In Goldman Sachs' view, Japan has crossed a critical inflation threshold, and a healthy "wage-price" cycle has formed, which has significant implications for both Japan and global markets. At the same time, positive inflation and economic outlooks will support the normalization of monetary policy. With this macro environment combined with the trend of corporate profit growth, Goldman Sachs expects the Tokyo Stock Exchange Index to achieve positive returns for the third consecutive year in 2025, rising to 3100 points. Goldman Sachs also predicts that the earnings per share of the Tokyo Stock Exchange Index will grow by 30% in the fiscal years 2024-2026, with a price-to-earnings ratio of 14.3 times, indicating sustained growth in corporate profits.

IG International analyst Hebe Chen pointed out that the performance of the Japanese stock market this year highlights both resilience and vulnerability, and the trajectory entering 2025 may balance favorable economic fundamentals with changing macro uncertainties She explained: "As the Japanese stock market continues to rise, investor sentiment is still buoyed by the resilience of the Japanese economy and optimism about the stock market recovery. However, uncertainty remains high. The Bank of Japan's expected interest rate hikes in 2025 could exacerbate volatility, and the momentum of the Japanese economy will face multiple external risks—including the risk of escalating trade tensions with the United States and other economies. These factors could adversely affect the sustained rise of the Japanese stock market."

One uncertain factor is that the interest rate policies of the Federal Reserve and the Bank of Japan may diverge. If the Federal Reserve rapidly cuts interest rates in 2025 while the Bank of Japan continues to raise rates, this would lead to an appreciation of the yen, posing a threat to the overseas earnings of Japanese companies. For Japanese firms, most of their revenue and profits come from overseas rather than from Japan itself. Another uncertainty lies in the fact that, considering the significant share of exports in the Japanese economy, it remains to be seen whether Trump's high tariffs will harm Japan.

There are even views that Japan is likely to become one of the main sources of risk in the global market in 2025. Some investors believe that in July of this year, the unexpected interest rate hike by the Bank of Japan, in the context of the Federal Reserve potentially cutting rates, led to a rapid strengthening of the yen, further prompting global speculators to close positions and sell stocks. Looking ahead to next year, as Japan's long-term inflation expectations approach the 2% target, if the Bank of Japan raises rates more than expected, this could accelerate the appreciation of the yen, making the phenomenon of negative real bond yields in Japan difficult to sustain by 2025, potentially bringing a new wave of "stormy weather" to the global market similar to that seen in early August.

Italy

Since the beginning of this year, the FTSE MIB index in Italy has risen by 11.16%, showing an overall upward trend despite experiencing multiple fluctuations.

The economic situation is the main influencing factor for the Italian stock market. The FTSE MIB index performed strongly for a period at the beginning of the year, especially from January to April. Against the backdrop of a gradual global economic recovery, major listed companies in Italy performed well, driving the rise of the index.

However, starting from mid-May, the Italian stock market began to adjust, with increased volatility. Analysts pointed out that the intensifying uncertainty in the global macroeconomic environment, particularly the rising interest rate expectations in the U.S. market and global supply chain issues, led to heightened risk aversion among investors. Meanwhile, the slowdown in domestic economic growth in Italy also put pressure on the stock market.

Fortunately, the FTSE MIB index showed resilience during July and August, without significant declines. The economic reform policies continuously promoted by the Italian government—such as adjustments to the National Recovery and Resilience Plan—have boosted market confidence in future economic development. Despite controversies, the adjustments made by the Meloni government in social policy, economic revitalization, and fiscal discipline have generally gained market recognition This policy background supports the rebound of the FTSE MIB Index in Italy, which rebounded in early September after a short-term correction, reflecting investors' confidence in the Italian government's economic policies and optimism about the competitiveness of major Italian companies in the global market.

Since September, the Italian stock market has shown a trend of sideways fluctuations due to concerns about the economic outlook for the Eurozone, including Italy. Data shows that the Eurozone Composite PMI fell to 48.9 in September, dipping below the boom-bust line of 50 for the first time since February this year. Both Germany and France, the two main engines of the Eurozone economy, have accelerated their contraction, with Germany's Composite PMI preliminary value declining for the fourth consecutive month, and France's services sector falling back into contraction with a significant drop in manufacturing sales. Italy's GDP unexpectedly stagnated in the third quarter, reflecting a similarly bleak economic outlook for the country.

In summary, since 2024, the Italian stock market has exhibited complex dynamics. Despite numerous external and internal factors, particularly the uncertainty of the global economy and the slowdown of domestic economic growth in Italy, the FTSE MIB Index has still achieved steady growth driven by government policy support, recovery in major industries, and global market demand.

For Italy, the macroeconomic environment has a direct impact on the performance of the FTSE MIB Index. The latest report released by the Italian National Institute of Statistics in early December indicates that the country's economic growth rate is expected to be only 0.5% in 2024, a rate far below many economists' expectations and lower than 3.7% in 2022 and 0.9% in 2023. The slowdown in domestic economic growth in Italy highlights the difficulties of recovery. Meanwhile, Italy's economy is heavily reliant on foreign trade and the global investment market, and any changes in the international economy could impact the performance of the Italian stock market through trade chains and capital markets.

Singapore

The Singapore stock market is another market that has performed well in 2024. As of December 26, 2024, the FTSE Straits Times Index has risen by over 16%, making it the best-performing stock market in Southeast Asia.

The strong performance of Singapore's economy is one of the key reasons driving the recovery of the stock market. Data shows that Singapore's GDP grew by 5.4% year-on-year in the third quarter, with a seasonally adjusted quarter-on-quarter growth of 3.2%, exceeding expectations. Singapore's GDP grew by 3.0% in the first quarter and 2.9% in the second quarter, along with the strong performance in the third quarter, resulting in a year-on-year GDP growth of 3.8% for the first three quarters of this year.

Due to the better-than-expected economic performance in the first three quarters, Singapore's Ministry of Trade and Industry raised its GDP growth forecast for the entire year of 2024 to 3.5% at the end of November. This marks the second upward adjustment of GDP forecast data by the Ministry of Trade and Industry within three months. Officials from the Ministry believe that due to the strong economic growth performance in the first three quarters, there is a possibility that the full-year GDP growth may exceed the expected target of 3.5% The International Monetary Fund (IMF) is also optimistic about Singapore's economic performance this year. The organization raised its GDP growth forecast for Singapore to 2.6% for this year on October 22, and adjusted the 2025 growth forecast to 2.5%, an increase of 0.5 and 0.2 percentage points respectively from its predictions in April this year. In contrast, Singapore's GDP growth rate was only 1.1% in 2023. Economists believe that despite the high uncertainty in geopolitical and external environments, Singapore's economic performance this year has been relatively robust and exceeded expectations, with the manufacturing sector still in an expansion phase. As long as the GDP growth rate in the fourth quarter does not fall below 2.7%, there is a high probability that the new target of 3.5% growth for the year will be achieved.

In addition to strong economic performance, in the second half of this year, Singapore's regulatory authorities introduced a series of "market rescue" measures, which also played a certain role in boosting the stock market.

Analysts pointed out that the advantages of the Singapore stock market are mainly reflected in the following aspects: first, a diversified economic structure, as Singapore's diversified development in finance, technology, and logistics reduces reliance on a single industry and enhances its ability to withstand economic fluctuations; second, a stable policy environment, as the Singapore government implements transparent and efficient economic policies, boosting the confidence of international capital, especially against the backdrop of rising global uncertainty; third, its position as an international capital hub, attracting a large amount of safe-haven funds as Southeast Asia's financial center, particularly its appeal for long-term capital; fourth, strong corporate profitability, as listed companies in Singapore have shown significant profit growth in technology, energy, and real estate sectors, providing strong support for the stock market.

Looking ahead, Morgan Stanley Asia equity analyst Wilson Ng stated that as investors shift to defensive positions and seek safe havens amid uncertainties in new U.S. policies, Singapore may see more capital inflows in 2025, with the stock market expected to perform well again. He also believes that the good performance of the Singapore stock market in 2024 is likely to continue into next year, as it will benefit from the reform plans to be released by the Monetary Authority of Singapore (MAS) next year.

Emerging Markets

In terms of emerging markets, countries such as Argentina, Venezuela, Pakistan, Sri Lanka, and Kazakhstan have shown good stock market performance. Overall, the rise in these stock markets this year is partly due to improvements in the economic fundamentals of these countries or positive expectations for their economic outlook.

Venezuela

Data shows that Venezuela's main stock index, the IBC index, has surged over 99% since 2024, outperforming the approximately 5.8% increase in the MSCI Emerging Markets Index this year. Despite still facing multiple economic sanctions, Venezuela's GDP growth rate for 2024 is surprisingly strong. Venezuelan President Maduro previously announced that the country's GDP is expected to grow by over 9% in 2024, with significant growth in the real economy, including goods production and services. This positive economic growth momentum provides a foundation for the rise in the stock market.

Venezuela is the country with the largest oil reserves in the world, possessing abundant oil resources. However, due to a lack of investment and technology, the efficiency of oil production has been severely impacted in recent years. Nevertheless, with the recovery of international demand for oil, Venezuela is gradually restoring its oil production capacity. Recently, the state-owned oil company of Venezuela has begun to cooperate with international oil companies to upgrade technology and restart production, bringing new hope for the country's exports.

At the same time, in the face of international sanctions, the Venezuelan government has started to adopt flexible policies to stimulate economic development. For example, it has gradually relaxed restrictions on the private sector and encouraged participation from overseas investors. Additionally, the government is increasing investment in the non-oil economy, such as agriculture and tourism. The implementation of these policies has not only enriched the economic structure but also created new job opportunities. After experiencing a long period of economic recession, the consumption willingness of the Venezuelan people is gradually recovering. With the improvement of market supply, demand for various goods among residents has risen, driving rapid development in the service industry, and the return of consumers has injected new vitality into economic growth.

Sri Lanka

Data shows that Sri Lanka's main stock index, the ASPI index, has risen nearly 46% since the beginning of 2024, reaching a historical high.

Sri Lanka's Gross Domestic Product (GDP) growth rates for the first three quarters of this year were 5.3%, 4.7%, and 5.5% year-on-year, with the third quarter's year-on-year growth rate being the highest since the fourth quarter of 2017. In the first three quarters of 2024, Sri Lanka's real GDP grew by 5.2% year-on-year, in contrast to a 2.3% year-on-year decline in real GDP for the entire year of 2023, and a significant decline of 7.8% in 2022. It is evident that Sri Lanka's economic recovery is the intrinsic driving force behind the stock market's rise.

At the same time, Sri Lanka's inflation rate has significantly decreased, with the inflation rate expected to drop below 2% in 2024, whereas two years ago, Sri Lanka's inflation rate was as high as 70%. The alleviation of inflationary pressures helps to reduce the tightening pressure on the central bank, which is beneficial for economic growth and stock market performance.

Due to improved supply-side conditions, enhanced external buffers, and increased foreign exchange, Sri Lanka's economic outlook has improved. Supported by relatively stable global economic conditions, the growth of developing economies in Asia has accelerated, and Sri Lanka, as a part of this group, has also benefited from this trend. Furthermore, the Sri Lankan government has implemented a series of economic policies and reform measures to promote economic growth and stability, which have had a positive impact on the stock market.

In addition to its own economic revival, the rise of the Sri Lankan stock market has also been influenced by the international environment. The ASPI index of Sri Lanka has rapidly increased since September, and if calculated from mid-September, the index has risen by more than 47.7% since then, making it one of the strongest-performing markets globally in the second half of 2024. Notably, September was also the time when the Federal Reserve began to cut interest rates Kazakhstan

Data shows that Kazakhstan's main stock index, the KASE index, has risen over 32% this year and reached a historical high in early December.

According to the World Bank's report released in November 2024, Kazakhstan experienced significant economic growth in the third quarter of 2024, with real GDP growing by 4% year-on-year from the beginning of the year to the end of September. Particularly in the third quarter, the economic growth rate reached 5.6%, marking the highest quarterly increase since the pandemic.

The main driver of Kazakhstan's economic recovery is the increase in public spending. Data shows that government spending grew by 5.3% in real terms, further boosting the overall positive performance of the economy. Additionally, the Kazakhstan government predicted in August that the economy would grow by 6% in 2024, higher than the earlier forecast of over 5.3%. This positive economic growth expectation provides a solid foundation for the rise in the stock market.

However, Kazakhstan's inflation level remains high. By September 2024, the inflation rate had eased from a previous 9.5% to 8.3%, but still exceeded the target level of 5%. Food prices fell to 5%, the price increase of non-food goods dropped to 7.6%, while service prices remained high at 13.6%, which may be related to the rising costs brought about by the continuous growth of real wages.

Argentina

Data shows that Argentina's MERVAL index has risen over 179% this year, a remarkable increase.

Analysts generally believe that the rise in Argentina's stock market reflects market optimism about potential economic reforms and recovery. The current Argentine economy shows a series of positive signs, including a fiscal surplus for 11 consecutive months, a rebound in consumption and investment, and a significant decline in inflation compared to previous levels.

According to data from the Argentine Statistics Bureau, the inflation rate in November slowed to 2.4%, the lowest level since July 2020, significantly down from the high of 25.5% in December last year. Although Argentina's cumulative inflation rate over the past 12 months still reached 166%, it has significantly slowed from nearly 300% in April this year. Additionally, since April this year, Argentina's wage growth has outpaced inflation, and employment growth is slowly recovering.

Data shows that Argentina's GDP grew by 3.9% quarter-on-quarter in the third quarter, marking the first quarter-on-quarter growth since the economy fell into recession in the fourth quarter of 2023, while GDP in the first and second quarters of this year fell by 2.6% and 1.7%, respectively. In the third quarter of this year, Argentina saw significant quarter-on-quarter growth in exports, consumption, investment, and other economic indicators. However, Argentina's GDP in the third quarter still declined by 2.1% year-on-year, with significant growth only in exports, while consumption, investment, and imports all saw year-on-year declines From an industry perspective, only the agriculture and energy sectors performed relatively well, while the construction and manufacturing sectors showed significant downturns.

Analysts pointed out that Argentine President Javier Milei has reduced inflation through measures such as currency devaluation and the cessation of subsidies. Although these actions have had a positive effect on price stability in the short term, they essentially represent a control of inflation achieved by compressing demand and production. The tightening effect of the policies has directly weakened residents' purchasing power and suppressed domestic demand, while also bringing severe social and economic side effects, such as rising poverty rates and frequent protests and strikes against government economic policies.

The academic community remains cautious about the economic situation in Argentina. JP Morgan stated that it expects Argentina's economy to continue shrinking throughout 2024, with the manufacturing and construction sectors remaining severely depressed. Even if growth is achieved in 2025, it would only restore per capita GDP to the level just after the country emerged from the COVID-19 pandemic in 2021. Therefore, despite improvements in fiscal, inflation, and trade indicators, Argentina's economy has not stopped its decline, and risks such as weak domestic demand, liquidity changes, and exchange rate issues cannot be ignored.

Pakistan

After rising 54% in 2023, Pakistan's benchmark stock index KSE 100 has increased by over 78% this year, reaching a historical high at the end of the year.

This year, the Pakistani stock market has not experienced the "stock market bubble burst" that foreign investors were concerned about. The current rapid rise in the Pakistani stock market began in mid-2023 when the country secured a $3 billion bailout from the International Monetary Fund (IMF) to avoid sovereign default. In September of this year, the IMF approved a separate $7 billion bailout plan, which requires the country to undertake broader reforms as a condition.

The conditions set by the IMF have made the stock market an attractive option for Pakistani investors. Reportedly, the IMF's conditions include tax increases, the elimination of subsidies in the electricity and export sectors, raising energy and fuel prices, and adopting a market-based exchange rate. These conditions have prompted Pakistani investors to shift funds previously invested in the foreign exchange and real estate markets into the stock market, as returns in those markets have become significantly constrained.

Munir Khanani, vice president of the Pakistan Stock Brokers Association, stated that the reasons for the remarkable performance of the Pakistani stock market include exchange rate stability, a positive macroeconomic outlook, and most importantly, the astonishing returns contributed by large-cap indices. For example, the stock price of Fauji Fertilizer Company has increased by over 250% this year, while Pakistan Petroleum Limited has seen monthly increases of up to 30% over the past three months.

Meanwhile, the State Bank of Pakistan cut the key policy rate by 200 basis points to 13% in December, marking the fifth consecutive rate cut since June of this year. Against the backdrop of easing inflation, Pakistani authorities are continuously taking measures to revive the sluggish economy. This easing trend may continue until 2025, providing some relief to consumers and businesses Overall, in 2024, the Pakistani economy exhibits a complex combination of short-term stability and long-term persistent fragility. The Pakistani economy has shown significant improvement this year, at least in terms of macroeconomic indicators. Despite some positive trends in 2024, market participants remain cautious about Pakistan's economic outlook. The real economy, particularly agriculture and manufacturing, remains a key area for reform. Although the stock market and external financial stability have improved, much work remains to ensure sustainable growth.

Political stability, ongoing economic reforms, and export diversification will be key to addressing the challenges of 2025. If Pakistan can build on the positive measures taken in 2024, a more resilient economy may be possible in the future. However, political uncertainty still poses significant risks that need to be addressed to ensure long-term stability.

Summary

With improvements in economic fundamentals or driven by other factors, the aforementioned stock markets have achieved impressive results this year. Looking ahead to the global stock market in 2025, most economists are optimistic, primarily due to: the robust global economy potentially driving continued gains in global stock markets; central banks such as the Federal Reserve and the European Central Bank continuing to cut interest rates next year, which will support upward movement in global stock markets; and technological innovation and green transformation continuing to drive growth in global stock markets, particularly in areas such as artificial intelligence and renewable energy, which are expected to remain bright spots in the global stock market.

Morgan Stanley stated last month that for the global stock market in 2025, opportunities and challenges coexist. A stable global economy in 2025 may benefit the stock and fixed income markets, but increasing uncertainty surrounding U.S. tariffs and immigration policies could jeopardize market gains.

JP Morgan believes that the global stock market in 2025 may face a complex situation under the interplay of multiple factors, with the core theme for next year's global stock market being increased divergence. Discrepancies in central bank policy paths, uneven rates of inflation decline, and advancements in technological innovation may continue to widen the differences in business cycles across different regions of the world. Additionally, increasing geopolitical uncertainty and the evolution of government policy agendas will add further complexity to the outlook for the stock market.

It is worth mentioning that many institutions are optimistic about the performance of emerging market stocks in 2025. Bank of China believes that due to the evolution of the global economic and trade landscape and its own economic reform and development policies, emerging markets will maintain a high economic growth rate, and emerging market stocks are expected to present good investment opportunities. Supported by economic fundamentals, relatively low valuations indicate greater upside potential for various markets. Meanwhile, Bank of China believes that while U.S. stocks remain in an upward channel in the short term, long-term growth potential is limited, and the overall valuation level of U.S. stocks may restrict their long-term growth; while next year, European stock markets may lack upward momentum, with increased market uncertainty