| Good morning. The best trades. The biggest risks. The looming elections. And the Fed. Here's what people are talking about in Asia as 2024 begins. Asset allocation has rarely been so challenging. The past 12 months saw a plethora of surprises from the fizzling of China's recovery to volatility sparked by two wars. For 2024 there's optimism that a Federal Reserve pivot will give financial markets a boost. That has the biggest money managers picking top trades for Asia, from buying Indian and Indonesian stocks to selling Japanese bonds. Some are looking to juice their returns with obscure niche trades, while others may stick to the EV craze that fueled the biggest stock-market gain of 2023. For the China bulls on Wall Street, 2023 was a year to forget. And for Hong Kong in particular, it turned out to be one of the worst in recent memory, at least as far as its markets are concerned. Those who bought into the idea that China's consumer and green energy stocks would win big from President Xi Jinping's renewed economic agenda would equally have seen their holdings pummeled. By the fourth quarter global markets seemed to be enjoying an everything-but-China rally. That's prompting investors to funnel cash into ETFs tracking emerging-market stocks excluding China instead. The dollar was knocked by its worst year since the onset of the pandemic as Wall Street jumped on the idea the Fed would lower interest rates after safely reining in prices. But Fidelity International, JPMorgan and HSBC are going against consensus by warning of dollar strength this year. Meanwhile market participants polled by Bloomberg say three straight years of outsized declines in the yen look set to end in 2024. And spare a thought for Asia's worst-performing currency, which looks set to see its losses extend into 2024. Robust economic growth, an infrastructure push and a pause in interest-rate increases helped propel India's equity market to successive highs in 2023 and a record eighth-straight year of gains. Expectations of continued inflows from retail and foreign investors, as well as strong growth in corporate earnings, are encouraging bets on a ninth. They should also keep the country's booming market for equity sales buoyant into the new year. Add that together and there's never been a better time for India's mutual funds. Morgan Stanley sees another good year ahead for emerging markets. But don't expect it to be plain sailing, strategists led by James Lord say. After three weeks of client meetings, they honed in on nine surprises that threaten to jolt markets in 2024. These range from a spike in US Treasury yields to a policy pivot in China. Stay nimble out there, expect the unexpected and good luck with your investments. These are some of Bloomberg's biggest global reviews of 2023 and year-ahead preview stories: - A record high is in the cards for US stocks in 2024.
- Here's everything Wall Street got wrong in 2023.
- Wall Street forced by Fed to rethink 2024 bond yields.
- Top stock fund beating 97% of peers shifts from tech to energy
- The 11 big trades of 2023, from market busts to career-making wins.
- Hindenburg's calls on Icahn, Adani mark a year of prominent bets.
- Powell ignites 2024 stock, bond gains with promises of cuts.
And finally, here's what else Paul is interested in for the year ahead: A series of elections throughout 2024 will dominate the local and global newsflow and investors will need to be on their toes to keep up. Implied volatility in currency markets has already started to flicker to life around key election dates in APAC — and the temperature is starting to rise ahead of the US Presidential election later in the year. First up is Taiwan. Voters in the democracy of more than 23 million people will choose their next president and lawmakers on Jan. 13 in an election that may also help shape US-China relations for years. Investors in Taiwan's assets would likely favor a China-friendly outcome and worry about a potential deterioration in cross-strait relations should Vice President Lai Ching-te of the ruling Democratic Progressive Party win. Taiwan's ties with China dominated a three-way debate between the island's presidential candidates on Saturday. Next up will be a vote in Indonesia in February, where investors will watch to see who will succeed President Joko Widodo and whether they will uphold his policies. And then there's India. Last year, foreign investors turned bullish on the outlook for the nation's stocks after victories in key state elections by Prime Minister Narendra Modi's party. Success for Modi in upcoming general elections, which would help confirm political stability, would probably encourage global funds to keep investing in the nation. Finally, later in the year the US vote will be an election in which a potential overhaul of trade policy — and the threat of protectionist tariffs — will dominate headlines and drive currency movements, according to JPMorgan strategists. That could mean more volatility for the Taiwan dollar and Chinese yuan, they say. Paul Dobson is the Markets Executive Editor for Bloomberg News in Asia, based in Singapore. | 
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