Morgan Stanley expects gross domestic product (GDP) and earnings per share (EPS) growth to again beat expectations in Japan and India and miss in China and emerging markets (EM) in 2024.

“We trim our EM target again to 1,000 (4% upside), with our previously below-consensus earnings forecasts lowered by another 5% across 2023-25. Key headwinds include the slowing global growth backdrop, higher interest expense burdens and further weakness in key EM exchange rates against the USD-denominated index,” said a Morgan Stanley report.

China is likely to continue struggling with debt-deflation challenges.

“Our economists are below-consensus on GDP growth (4.2% real GDP and 4.8% nominal GDP growth in 2024), while our foreign exchange (FX) team expect CNY/ USD to weaken to 7.5 over 1H24. This keeps us substantially below consensus on EPS growth for a fourth year running and we look for a muted 5% return for MSCI China and 7% for CSI300 in 2024.”, the report added.

India’s growth rate

“In stark contrast, our team forecasts Indian nominal GDP growth at 11.6% in 2024 and 11.2% in 2025, with a young demographic and geopolitical alignment driving inflows and reducing the cost of equity,” the report said.

Japan has convincingly emerged from three decades of economic stagnation (although it exited deflation in 2013, growth had been lacking), while seeing an acceleration in corporate reform.

India has delivered strong relative earnings, sustaining the strong market outperformance seen in 2022, while macro-fundamentals have withstood a sharp tightening in US financial conditions, the report said.

(Source: IANS)

- Edited for style

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