Australia
China
India
Indonesia
Japan
Malaysia
Philippines
Singapore
South Korea
Taiwan
Thailand
Vietnam
Despite global uncertainties and uneven recoveries, several Asian economies continue to demonstrate resilience and growth potential, making Asia a dynamic and diverse investment region. However, separating promising markets from those facing headwinds remains a key concern for investors.
Elizabeth Soon, Head of Asia ex-Japan Equities at PineBridge Investments, believes that Asia will be a region of opportunity in 2025 following a year of profound global change, highlighting equities as positioned to offer diversification and resilience across multiple geographies and sectors.
Taiwan, Korea: leader in technology
Regarding regions and sectors, asset managers see Taiwan’s and South Korea’s artificial intelligence (AI)-related technology as promising. Taiwan’s equity market was the best-performing major Asian market last year, and Taiwanese semiconductor companies are expected to boost the economy further.
„Amid the AI hype in 2023, valuations of AI-related stocks ran ahead of earnings delivery, leading to a correction for some in 2024,” PineBridge’s Soon comments. “Between Taiwan’s and Korea’s technology sectors, we tend to favour Taiwanese companies, which we view as more nimble and able to provide AI solutions to their customers. We prefer AI server component suppliers and leading ASIC IP providers within the AI space.”
While Korea has lost some of its competitiveness in the AI sector, Franklin Templeton sees a potential turnaround. Marcus Weyerer, Director of ETF Investment Strategy EMEA at Franklin Templeton, suggests that Korea could regain a strong position if it catches up technologically or if the consumer electronics market gains momentum.
Given that Taiwan and Korea play crucial roles in global technology supply chains, they are expected to remain relatively insulated from adverse effects of US trade policies despite their heavy export dependency.
India: a promising emerging market
India is another bright spot in Asia. Digital initiatives are driving the transformation of the country’s economic landscape.
Jupiter Asset Management views India as the “most attractive emerging market in Asia, and probably the world”. Sam Konrad, Investment Manager, Asian Equity Income at Jupiter, notes that India trades at a premium compared to the rest of Asia and other emerging markets. He believes this premium is justified but emphasises the importance of carefully selecting companies within the market.
PineBridge’s Soon highlights India’s banking sector as well-positioned to benefit from a favourable economic outlook in 2025. “After several tough years before the pandemic, when bad loans impaired balance sheets, the banks have recovered dramatically, with a rise in cumulative profits boosting banks’ equity capital base. Banks are also attractive from a valuation perspective,” Soon says.
Australia, a developed market gem
From the developed markets, Jupiter’s Konrad highlights Australia. It is often overlooked, despite its diverse economy beyond commodities. He emphasises Australia’s strong population growth driven by migration and natural increase.
“Australia is a land of oligopolies – in many sectors you will find a small number of very strong companies with a very high combined market share and that are very well managed,” Konrad adds.
Mainland China: to invest or not?
When it comes to investing in China, opinions are divided.
“China is interesting from a valuation viewpoint,” comments Franklin Templeton’s Weyerer. “But investors need to be able to tolerate the volatility.”
He sees the government stimulus as encouraging but says the market needs to see more support. “We continue to expect volatility to flare up, both in the property sector and due to geopolitical tensions with the West. The technology opportunities are significant, but the sector also carries unique risks due to its sensitivity to national security and US sanctions,” Weyerer adds.
Manulife Investment Management sees the government’s focus on AI and technology as positive catalysts for China. This year’s “Two Sessions” reaffirmed the goal of technological self-reliance by expanding research and development funding for generative AI, quantum computing, robotics and automation.
“As we anticipate more innovation in the humanoid robot industry and faster development in autonomous driving, we continue to favour technology, media, and telecommunications (TMT) and platform companies, advanced manufacturing companies with go-global strategies, edge AI beneficiaries, as well as the robotic supply chain,” says Wenlin Li, Senior Portfolio Manager, Greater China Equities.
Conversely, Jupiter advises caution regarding investments in China. Konrad states that Jupiter does not invest in mainland China due to concerns about the domestic political and economic system, which he believes prevents economic growth from translating into earnings growth for Chinese companies.
„We also believe that the state of the economy at the moment and the property sector in particular makes it difficult for investors. Additionally, China has serious demographic challenges over the longer term,” Konrad adds.
