HSBC Asset Management highlights recent mighty gains in Asia-Pacific ex-Japan shares and says regional factors are currently driving performance. The report cites macro reforms, ridiculed economies, resilient domestic demand and Asia’s central role in the global technology and artificial intelligence supercycle. It concluded that Asian equities offer relatively low-cost and diversified access to high-quality growth opportunities.

Asian stocks benefit from AI cycle

“Last year, Asia-Pacific (ex-Japan) stocks rose 32% in USD terms, the best annual performance since 2017. This was despite trade and geopolitical tensions and uncertainty over global politics. A weaker US dollar helped, as did lower-than-feared effective tariffs and a US-China trade truce.”

“But this year, the focus is on the region’s solid fundamentals. Macro reforms and ridiculed economies provide a strong structural backdrop. Meanwhile, the outlook for GDP and corporate earnings looks positive, domestic demand is resilient and there is progress in regional trade integration.”

“Another factor is Asia’s role in the technology and AI supercycle. Asia dominates semiconductor production, particularly in Taiwan and South Korea, as well as software development – Asian countries are among the world’s largest contributors to GitHub code.”

“The economies of India and Southeast Asia, particularly Singapore, Malaysia and Vietnam, are also part of the AI ​​value chain, from assembly to data centers. Technology innovation in mainland China appears poised to deliver strong policy-driven growth this year, with AI at the heart of the country’s economic and industrial plans, with a focus on sectors such as electric vehicles, green energy and advanced manufacturing.”

“The outlook for Asian equities is constructive, with markets offering a lower-cost AI trading play, as well as broad sector diversification and high-quality growth opportunities.”

(This article was created with the support of an artificial intelligence tool and has been reviewed by an editor.)