Weekly Buzz: šŸ… The economic marathon for third place

16 February 2024

Share this

  • linkedin
  • facebook
  • twitter
  • email

Want more?

We thought you might.

Join the hundreds of thousands of people who are taking control of their personal finances and investments with tips and market insights delivered straight to their inboxes.

Among the biggest economies of the world, in terms of GDP, Japan just lost its third place standing to Germany. India, on the other hand, is shaping up to beat them both.

Whatā€™s going on here?

In US dollar terms, the Japanese economy shrank from $6.3 trillion in 2012 to $4.2 trillion in 2023. But thatā€™s mainly because the Japanese yen weakened against the US dollar during that time. In fact, when you take out the greenback factor, the economy likely picked up by 12% in the span of those 11 years.

So if the yen strengthens enough, Japan could take back its spot. Whatā€™s more, with whispers that its central bank may raise interest rates for the first time since 2007, Japan may soon turn its decades-long deflation around.

Keep in mind, Germanyā€™s also stumbling in the race. Production levels in the countryā€™s industrial sector ā€“ which tends to lend bragging rights to Europe as a whole ā€“ were 1.6% lower in December from the month before, reaching a level thatā€™s 10% below the pre-pandemic rate.

Itā€™s no wonder Japan and Germany are jostling over the same spot on the podium. They both have ageing and shrinking populations, which is weighing heavily on all of their industries.

India, meanwhile, is on a tear: the countryā€™s population not only inched ahead of Chinaā€™s last year, but itā€™s younger, too. That spritely workforce is why, according to some analysts, Indiaā€™s on track to beat Germanyā€™s economy.

As an investor, what does this mean for me?

In the global marathon for the top spot, rankings will always change ā€“ thatā€™s just the nature of markets and economies.

But if youā€™re keeping track of the standings, and wondering which country will pull ahead next ā€“ why not bet on all the competitors? Investing in a globally diversified portfolio (shoutout to our General Investing portfolios) lets you keep pace with the growth of the world at large.

šŸ’” Investorsā€™ Corner:

A good market indicator might just be sitting on your coffee table

In some industries, being featured on the cover of a major magazine and touted as ā€œthe next big thingā€ would be seen as a reliable sign that youā€™re on the rise. In the financial markets, well, it might mean that the storyā€™s reached a saturation point.

Letā€™s look at some of the greatest hits of the appropriately named ā€œmagazine indicatorā€. The cover of BusinessWeek in 1979 boldly proclaimed ā€œThe Death of Equitiesā€, just before a roaring bull market. And The Economistā€™s 2003 cover claimed ā€œThe End of the Oil Ageā€, when crude was a mere $25 a barrel ā€“ and soon began its yearslong rise to $145.

These magazine moments are more than just quirky coincidences: theyā€™re a window into market sentiment at its peak. The usefulness of the magazine indicator boils down to the marketā€™s forward-thinking nature ā€“ investors are always trying to stay ahead of the game.

Current prices mostly arenā€™t about whatā€™s happening now, theyā€™re more about what might happen next (our Simply Finance section below breaks this down). And by the time a price trend hits the cover of a big magazine, chances are itā€™s old news to the market.

Keep in mind, while itā€™s a fun way to look back on history, this indicator is also often wrong. So while we wouldnā€™t base our investment strategies on magazine covers anytime soon, theyā€™re still worth keeping an eye on.

These articles were written in collaboration with Finimize.

šŸŽ“ Simply Finance: Forward-looking market

Investors and traders often make decisions based on whatā€™s expected in the future, rather than just current or past events ā€“ a forward-looking market. Itā€™s the reason why some companies are priced highly in the market, like with tech stocks.

Trying to predict future trends involves a variety of indicators, economic data, and analysis techniques. It's like steering a ship based on weather forecasts, rather than just reacting to the waves, allowing investors to potentially anticipate upcoming opportunities and risks.

šŸ—“ļø Save the Date

Deep dive into the current investment landscape of three key regions shaping the global market: Japan, India, and China. Join us as our Chief Investment Officer, Stephanie Leung, will be sharing insights on:Ā 

  • Emerging trends and risks that will define each market in 2024.
  • Structural changes driving the investment landscape of these markets.
  • Whether these markets should have a place in your portfolio.

āœØ Featured in App

šŸ§§ May your prosperity soar higher than dragons this year šŸ²

Happy Lunar New Year! To celebrate the Year of the Dragon, weā€™re giving away up to āœØ6 months of free investingāœØwhen you invest at least MY 1,888 with us before 29 February 2024.Ā 

Huat are you waiting for? Invest with our vouchers now and unleash more HUAT this Lunar New Year!

āœØ Featured in App

šŸ§§ May your prosperity soar higher than dragons this year šŸ²

Happy Lunar New Year! To celebrate the Year of the Dragon, weā€™re giving away up to āœØ6 months of free investingāœØwhen you invest at least MYR $1,888 with us before 29 February 2024.Ā 

Huat are you waiting for? Invest with our vouchers now and unleash more HUAT this Lunar New Year!


Share this

  • linkedin
  • facebook
  • twitter
  • email

Want more?

We thought you might.

Join the hundreds of thousands of people who are taking control of their personal finances and investments with tips and market insights delivered straight to their inboxes.