China Asia

1. Overall Summary

Across houses, Asia is framed as a structural growth and AI/manufacturing hub, with China transitioning to slower ~4–4.7% growth and near‑zero inflation, while Japan and India emerge as the cleaner equity stories. China is broadly seen as macro‑challenged but investable via tech/AI and select reforms, with CPI around 0–0.8% in 2026 and GDP around 4.0–4.7% Barclays p.7; KKR p.29; BofA p.2; UBS p.59]. Asia ex‑Japan growth is clustered just under 5% UBS p.23]. Most see North Asia (China–Korea–Taiwan–Japan) as central to the AI hardware/infra chain, with EM Asia equities at a ~40% valuation discount to US Goldman p.20; JPM p.9]. The sharpest splits are over how bullish to be on China (overweight vs neutral vs "tactical only") and US vs Asia leadership.

2. Where Analysts Agree

China is in a difficult structural transition, with slower but still meaningful growth. Most expect mid‑single‑digit GDP (~4–5%) driven less by property/low‑cost exports and more by consumption and higher‑tech manufacturing Barclays p.7–8; KKR p.29, p.44; BofA p.2; UBS p.23, p.59].

Deflation or very low inflation is a persistent issue in China. CPI forecasts cluster around 0–0.8% for 2026, with explicit concern about structural deflationary forces Barclays p.7–8; KKR p.29, p.50; BofA p.2; UBS p.59; T. Rowe p.5].

Policy in China is supportive but targeted, not a "big bazooka." High true fiscal deficits (~8–9% of GDP) and property/local‑government stress constrain broad stimulus; easing is via targeted fiscal support and selective rate cuts Barclays p.8; KKR p.50; UBS p.25; T. Rowe p.4–5].

Asia is the core global AI / tech hardware / data‑centre supply chain. China, Taiwan, Korea and Japan are repeatedly cited as central to AI chips, power, and robotics; China's DeepSeek and AI cloud, and Asia's projected 13.1% data‑centre CAGR underpin this BlackRock p.9, p.15–16; HSBC p.9–10; Goldman p.20; JPM p.9–10; UBS p.23, p.31–32].

Japan is viewed positively across the board. Strong nominal growth, governance reform, capex and reflation underpin overweight calls; BoJ is expected to keep hiking from very low levels BlackRock p.15–16; Goldman p.7, p.14; HSBC p.6, p.9–10; KKR p.51–54, p.66–67; UBS p.23, p.59–60; BofA p.2, p.17].

India is a structural winner on demographics and domestic demand. Sustained ~6.5–7% GDP growth, very young population, and digitalization (e.g., triple growth in digital payments since 2021) make India a core long‑run EM Asia story Goldman p.7–8; KKR p.17–18; BofA p.2, p.17; UBS p.59].

Intra‑Asia trade and regionalization are powerful, durable themes. Intra‑Asia trade is already ~60% of regional trade and projected toward ~68% by 2030 KKR p.20]; intra‑Asia container volumes up 13% since 2019 Brookfield p.24]; APAC has diversified away from US demand JPAM p.19–20].

3. Where Analysts Disagree

How bullish to be on China equities.
Overweight/constructive: HSBC (overweight mainland & HK; "land of opportunities" in AI + income) HSBC p.6, p.9–10]; UBS (China tech a "high‑conviction" global idea, MSCI China target +~16% by end‑2026) UBS p.31–32, p.60]; KKR (expects China to "exceed investor performance" selectively) KKR p.22].
Neutral/tactical: BlackRock (neutral China, favor AI/automation/power within it) BlackRock p.16]; Goldman (constructive but highly stock‑selective, big policy risk) Goldman p.20–22]; BofA (constructive but advising to lock gains and get more defensive near term) BofA p.17]; T. Rowe (China as a "tactical opportunity set") TRowe p.9].
US‑centric skepticism: Morgan Stanley frames China/EM mainly as underperformers vs US and not core allocations MS p.14–15, p.21].

China's inflation path and deflation risk. KKR is notably more bearish on inflation (CPI 0.3% in 2026–27, warning of a "deflation trap") KKR p.29, p.50–51], while UBS and BofA see modest reflation to ~0.4–0.8% by 2027–28 UBS p.59; BofA p.2].

Magnitude of Asia overweight vs US. KKR explicitly wants to "own more Asia" (equities, infra, credit) KKR p.8, p.22]; HSBC/UBS are overweight Asia and EM tech HSBC p.3, p.9–10; UBS p.32]. JPM is positive on Asian EM within a diversified international allocation JPM p.2, p.8–9]. Morgan Stanley, by contrast, argues for structural US equity dominance vs MSCI EM/Japan on EPS and ROE MS p.21].

Chinese policy effectiveness and urgency. HSBC/UBS stress a clear policy pivot to innovation and self‑sufficiency with meaningful AI and data‑centre support HSBC p.6, p.9–10; UBS p.23, p.25]. KKR and T. Rowe emphasize that without deeper reforms (services, safety net), current policy is insufficient to escape deflation KKR p.45–51; T. Rowe p.4–5]. BlackRock notes "relatively resilient activity limits near‑term policy urgency" BlackRock p.16], essentially saying Beijing is in no rush to do more.

Cyclical role of China in a 2026 global upturn. UBS/HSBC/Goldman see China and Asia as meaningful contributors to global growth and AI capex UBS p.23; HSBC p.9–10; Goldman p.7–8]. Stifel, using a China‑credit‑to‑PMI model, argues "China hasn't done enough in 2025" to drive a 2026 global manufacturing upswing Stifel p.26].

4. Core Narrative by Sub-Areas

A. China: structurally slower, deflation‑skewed, but AI‑rich

Macro & policy: Barclays, KKR, BofA, UBS all cluster around ~4–4.7% GDP in 2026 and near‑zero CPI Barclays p.7; KKR p.29, p.50; BofA p.2; UBS p.59]. Property deleveraging, high augmented fiscal deficits (~8–9% of GDP), and weak consumption keep policy constrained and inflation low Barclays p.8; KKR p.48–50; BofA p.2; T. Rowe p.4–5]. KKR is most explicit that China is "actually in a deflationary period" and fears a deflation trap unless there is a pivot toward services and social safety nets KKR p.14, p.45–50].

Reform & growth model: Consensus: shift away from property/low‑cost exports toward consumption, green tech, AI, and advanced manufacturing Barclays p.7–8; HSBC p.6, p.10; KKR p.14, p.46; UBS p.23, p.25]. UBS and HSBC lean optimistic that the 15th Five‑Year Plan (2026–30) will hard‑wire tech self‑reliance and industrial upgrading, aligned with AI cloud and data‑centre build‑out HSBC p.6, p.9–10; UBS p.23, p.25]. KKR questions whether services and social protection will keep up with lost manufacturing jobs and a RMB 72tn (~50% of GDP) housing wealth shock KKR p.46–48].

Equities – three camps:

Overweight, policy‑aligned growth + income (HSBC/UBS/KKR): HSBC runs a China barbell: AI/innovation champions plus high‑dividend "anti‑involution" winners; mainland China and Chinese hard‑currency credit are overweight HSBC p.6, p.9–10]. UBS calls China tech a "high‑conviction idea," with MSCI China targeted ~16% higher by end‑2026 (88→102) UBS p.31–32, p.60]. KKR wants selective China exposures (innovative pharma/AI, capital‑light models, carve‑outs) expecting China to "exceed investor performance" despite macro drags KKR p.22, p.49–50].

Neutral / selective beta (BlackRock/Goldman/BofA/TRowe/JPM): BlackRock is neutral on China but "likes AI, automation and power generation" and favors China tech within that neutral stance BlackRock p.16]. Goldman and BofA both see improved appeal after stimulus and tech support but insist stock selection is key to avoid policy shocks; they tilt to advanced manufacturing, AI/EVs, resilient consumption, and high‑dividend defensives Goldman p.20–22; BofA p.17]. T. Rowe calls China a tactical opportunity amid structural headwinds; AI platforms (e.g., DeepSeek) offer pockets of upside, but macro remains weak TRowe p.4–5, p.9]. JPM highlights China as the one major region whose earnings have not caught up with the US since the pandemic, even as AI examples like Deepseek show disruptive capability JPM p.9–10].

US‑first framing (Morgan Stanley, Stifel): MS mainly uses China/EM as underperforming comparators, arguing S&P 500 EPS/ROE justify US leadership; China/EM have lagged even in gold terms MS p.14–15, p.21]. Stifel focuses only on China credit stimulus, concluding "China hasn't done enough in 2025" to drive a global manufacturing rebound into 2026 Stifel p.26].

B. Japan: reflation + reform + AI leverage

Macro & rates: Japan is on a mild reflation path, with GDP around 0.7–1.0% and CPI near 1.6–2.2% in 2026 BofA p.2; KKR p.29, p.53; UBS p.59]. BoJ is widely expected to keep hiking gradually, with policy rate seen moving to 0.75–1.5% by 2026–27 KKR p.66–67; UBS p.60; Goldman p.14; BlackRock p.16; T. Rowe p.4–5].

Structural story: Nearly all sources highlight corporate governance reforms, higher capex, and wage growth as the core equity thesis BlackRock p.15–16; Goldman p.7; HSBC p.9–10; KKR p.51–53; UBS p.23; JPAM p.15–16]. KKR coins "Abe‑ism 2.0": negative real rates + positive real wages + nominal GDP > nominal rates, plus a big industrial/fiscal push into AI, semis, power infra and defense KKR p.51–53].

Equities: Japan is consistently one of the top overweight calls globally:

BlackRock: "one of our preferred tactical and strategic exposures" BlackRock p.15–16].
Goldman: strong "tailwinds heading into 2026" from wages, weak yen and buybacks Goldman p.7].
HSBC: overweight, with share buybacks up 220% y/y in April 2025 HSBC p.9–10].
KKR: expects Japan to outperform, especially through corporate carve‑outs and capital‑light businesses KKR p.22, p.53].
UBS: sees Japanese equities benefiting from domestic consumption and AI capex, and expects gradual JPY appreciation UBS p.23, p.60].
Morgan Stanley acknowledges solid TOPIX EPS growth (12% 2025–27) but still prefers S&P 500 MS p.21].

C. India & Southeast Asia: consumption upgrade and "China+1"

India: Strong consensus on ~6.5–7% GDP with benign inflation (~4–4.5%) through 2026–27 BofA p.2; UBS p.59; Goldman p.8]. Demographics (65% under 35; median age 28) and a threefold surge in digital payments underpin a long‑run consumption story Goldman p.8; KKR p.17]. Goldman, KKR, UBS and JPAM all highlight India as a key EM Asia winner; BofA is neutral tactically (valuations ~21x forward EPS) but expects ~14% earnings growth and ~11.5% equity returns in 2026 BofA p.17]. Brookfield and JPAM emphasize massive urbanization and housing/logistics needs Brookfield p.24; JPAM p.15–16].

ASEAN & broader SE Asia: KKR and JPAM stress China+1 manufacturing diversification and ASEAN‑5's path to upper‑middle income status by ~2030 KKR p.14, p.18; JPAM p.14]. Intra‑Asia trade and regional logistics demand are growing rapidly (e.g., intra‑APAC container volumes +13% vs 2019) Brookfield p.24; JPAM p.19–20]. UBS and HSBC see SE Asia benefiting from tech supply‑chain build‑out and credit growth, though with less detailed country breakdown UBS p.23; HSBC p.9–10].

D. Asia ex‑China: AI, banks, infra, and real assets

North Asia AI hubs (Korea, Taiwan): BlackRock, Goldman, JPM, UBS, HSBC all identify Taiwan and Korea as central to the AI/semiconductor/robotics chain: TSMC dominates sub‑10nm chips and plans $165bn of advanced US capex Goldman p.8; JPM p.9; BlackRock p.15; UBS p.23, p.32]. HSBC pairs this with the Asia data‑centre boom and preferential equity/credit exposure to Korean and Japanese tech and power equipment HSBC p.9–10, p.19–20].

Banks, credit and FX: HSBC and UBS are overweight Asian IG credit, Chinese hard‑currency and Indian local bonds, citing ~4.4% yields and room for Asian central banks to ease as US rates fall HSBC p.9–10; UBS p.59–60]. UBS expects CNY to appreciate modestly to ~6.9/USD and JPY to ~146/USD by end‑2026; HSBC also sees upside in KRW and SGD UBS p.60; HSBC p.24–25].

Real assets: JPAM, Brookfield and JPAM (real assets) emphasize APAC industrial/logistics, multifamily and office as structurally attractive given under‑allocation and robust occupier demand JPAM p.14–16, p.21; Brookfield p.24–25]. China's housing slump is a clear drag on timber demand into 2026–27, but a long‑term wood deficit remains JPAM p.42].

5. Key Conditional Risks

US–China trade/tech escalation vs truce. Many base cases assume stable or de‑escalating tariffs and negotiated outcomes on rare earths and AI chips BofA p.3, p.17; UBS p.23, p.47; BlackRock p.10; Goldman p.6]. A return to higher tariffs or broader export controls would hit Chinese tech, regional supply chains, CNY, and EM Asia equities.

China's success or failure in pivoting to services and consumption. If Beijing expands the safety net, deregulates services and better integrates migrant workers—as KKR prescribes—the deflation risk could recede and consumption could add 1–2% of GDP KKR p.45, p.49]. Failure to do so risks entrenching deflation, undermining the bullish China tech/AI equity case KKR p.50–51; Barclays p.7–8; T. Rowe p.5].

AI capex trajectory and energy/power constraints. Asia's bull case leans heavily on sustained AI infra spend. A slowdown in AI adoption or binding power/grid constraints in key markets (US or Asia) would reduce earnings for Asian semis, data‑centre and power equipment names BlackRock p.9; HSBC p.9–10; UBS p.23, p.31–32; JPM p.7, p.9]. Conversely, power bottlenecks in the West could push more AI capex to China/Asia, amplifying the upside BlackRock p.9–10; HSBC p.10].

Japan policy and inflation surprises. If BoJ normalizes faster than expected or the wage–inflation cycle falters, yen and rate volatility could derail the Japan equity consensus KKR p.53–54, p.66–67; T. Rowe p.4–5; Goldman p.14]. Positive surprises on governance and ROE (>10%) could justify more P/E expansion than currently in forecasts BofA p.17; HSBC p.9–10].

Dollar path and global risk appetite. Most Asia‑bullish views assume a weaker or at least non‑surging USD as US rates fall and global rebalancing proceeds BofA p.3–4; JPM p.8; HSBC p.10; UBS p.32]. A renewed USD spike or higher‑for‑longer US yields would pressure Asian FX, local bonds and equity flows.

6. Bottom Line

By 2026 the consensus is to be overweight Asia—but not blindly overweight China: lean into Japan, India, Korea/Taiwan AI supply chains, and selected China tech/income plays, against a backdrop of China GDP ~4–4.7% with CPI near 0% KKR p.29, p.50; BofA p.2; UBS p.59] and APAC ex‑Japan growth just under 5% UBS p.23]. The investable edge lies in owning Asia's AI/manufacturing and corporate‑reform winners while pricing in China's structural deflation risks and policy uncertainty, using EM Asia's ~40% P/E discount to the US as valuation support Goldman p.20; JPM p.8–9].

China’s growth model and macro outlook — Views on slowdown, deflation, and structural transition away from property/exports

Source	Content
Blackrock Outlook	China’s macro outlook is constrained by ongoing property stress and an aging population, even as trade relations with the U.S. have steadied and current activity remains relatively resilient, limiting pressure for urgent policy easing [p.16].
Goldman Outlook - Summary	Recent targeted stimulus to boost consumption and tech innovation is enhancing China’s equity appeal, with support driven by abundant liquidity, rising retail participation, and limited alternative investment options, but long-term outperformance hinges on converting this liquidity into durable earnings growth [p.7, p.10]. Policy and regulatory shocks, as well as potential re‑escalation in tariff rhetoric, are highlighted as key macro risks that have historically derailed China’s flow‑driven rallies [p.10]. Structural emphasis is on advanced manufacturing, AI/robotics/EVs/clean energy, biotech/fintech, and resilient consumption rather than property or traditional export‑led growth [p.7].
Brookfield Outlook	n.a.
Barclays Outlook	China is in a lengthy structural transition as traditional drivers—property and export-led manufacturing—are undermined by aging demographics and trade tensions, with focus shifting toward green technology, AI, and a consumption-led model that will take time to gain traction [p.7]. Real GDP growth is forecast to slow from 5.0% in 2024 to 4.8% in 2025 and 4.0% in 2026, while CPI inflation remains very low (0.2% in 2024, 0.0% in 2025, 0.8% in 2026), reflecting structural and cyclical deflation linked to overcapacity and weak consumer demand [p.7–8]. Private consumption remains only ~40% of GDP with a savings rate near 35%, underscoring the slow pivot toward a more consumption-driven growth model [p.8].
Goldman Outlook	China’s near-term equity support comes from targeted stimulus for consumption and tech innovation plus abundant liquidity and rising retail participation, but sustainable outperformance depends on translating this into durable earnings rather than credit/property-style growth [p.20][p.22]. Structural emphasis is on advanced manufacturing, AI/robotics/EVs/clean energy, biotech/fintech, resilient consumption, and high-dividend defensives, implicitly pointing to a transition away from old property- and export-led drivers, with tariff and regulatory shocks flagged as key macro risks [p.20][p.22].
MS - 2026 US Equities Outlook - The Rolling Recovery Is Here	n.a.
JPAM Outlook	China is shifting “from being the world’s factory to a high‑tech manufacturing hub” under Made in China 2025 and a Five‑Year Plan focused on technological self‑reliance, even as residential construction has slowed sharply and is expected to remain weak through 2026–2027, weighing on wood‑product demand and linked exporters [p.14, p.42]. Manufacturing in major APAC exporters accounts for only 2%–4% of total output, indicating that broader regional growth is not purely export‑manufacturing‑driven [p.19].
HSBC Outlook	China’s 15th Five‑Year Plan (2026–2030) pivots the growth model toward technology self‑sufficiency, innovation and “high‑quality development,” with policies to boost consumption, improve livelihoods and stabilise the property sector while moving away from old property/export‑led growth [p.6, p.10]. AI and advanced manufacturing, exemplified by a 122.4% y‑o‑y surge in China’s AI cloud market in H1 2025 after the DeepSeek breakthrough, are framed as key new growth engines even as persistent weakness in property and consumption remains a risk [p.9–10]. Soft inflation in Asia more broadly is cited as giving central banks room to ease [p.10].
KKR 2026 Outlook	China is projected to grow around 4.6% in 2026 and 4.4% in 2027—above consensus—while remaining in a near‑deflationary regime with CPI at just 0.3% in both years amid concerns about a potential “deflation trap” [p.29, p.44–45, p.50]. Structural headwinds include a manufacturing sector already near 30% of global output with ~94m potential job losses by 2035, an underdeveloped services sector at only 56.7% of GDP vs 66.3% globally, a housing bust wiping out RMB 72tn (~50% of GDP) in wealth, and a thin social safety net that forces high precautionary saving and depresses consumption [p.46–48]. Escaping deflation is framed as hinging on strengthening employment, rebuilding housing‑linked wealth/confidence, and expanding services and social protection to rebalance away from property and export‑led growth [p.45–49].
JPM Outlook	n.a.
Stifel Outlook	n.a.
TRowe Outlook	Domestic economic data are likely to continue softening, with the housing industry still under pressure and stimulus only sufficient to support, not materially boost, growth due to ongoing structural challenges [p.4–5]. Weak domestic demand is expected to keep consumer prices low, while the “anti‑involution” campaign aims to reduce production of commonly exported goods, raising their prices and further complicating the global trade environment as China transitions away from property- and export‑led growth [p.4–5].
RIC 2026 BAML	China is projected to see solid but slowing growth with GDP easing from 5.0% in 2025 to 4.7% in 2026 and 4.5% in 2027, alongside near‑zero inflation (CPI −0.1% in 2025, 0.0% in 2026, 0.5% in 2027), implying a controlled deceleration from a disinflationary/deflationary starting point [p.2]. Within a broader “global rebalancing” theme, China is framed as shifting away from excess industrial capacity via an “anti‑involution” campaign and toward more sustainable domestic demand and technology upgrading, contributing to upside potential for structurally unloved Chinese equities [p.3, p.17].
UBS Year Ahead	China’s growth path stabilizes around 4.5–5.0% in 2026, with the new Five Year Plan and the goal of doubling GDP per capita by 2035 anchoring a shift toward technology innovation, industrial upgrading, and supply chain diversification as key engines of stability amid global uncertainty [p.23][p.25][p.59]. Growth is characterized as resilient but more muted than in the past, with focus on quality and competitiveness rather than property- and export-led expansion, while inflation remains very low (CPI 0.4% in 2026, rising only to 1.0% by 2028), implicitly signaling ongoing disinflationary pressures [p.59].

China policy tools and constraints — How far stimulus, fiscal space, and PBoC action can go

Source	Content
Blackrock Outlook	n.a.
Goldman Outlook - Summary	Policy support has focused on boosting consumption via direct measures such as service‑sector consumption vouchers and indirect support to property and employment, which, together with abundant liquidity, have underpinned the equity rally [p.10]. Constraints are implied by the liquidity‑driven, fragile nature of the rally and by the risk that further policy or regulatory shocks could reverse flows [p.10].
Brookfield Outlook	n.a.
Barclays Outlook	PBoC stimulus in early 2025 aims to inject liquidity, support domestic demand, and revive sentiment to meet an around 5% growth target, but ongoing property deleveraging and weak demand limit its effectiveness [p.7–8]. Fiscal space is constrained: the official deficit is 4% of GDP, but including off-budget local borrowing and special funds pushes some estimates to 8–9%, and rising local government debt “constrains policy flexibility,” implying any stimulus will be targeted rather than broad-based, with interest rates remaining under pressure [p.8].
Goldman Outlook	n.a.
MS - 2026 US Equities Outlook - The Rolling Recovery Is Here	n.a.
JPAM Outlook	n.a.
HSBC Outlook	Policy is pro‑growth, with more stimulus planned to support consumption, livelihoods and property, alongside supply‑side “anti‑involution” reforms to lift corporate margins and support private‑sector tech champions and shareholder returns [p.3, p.6, p.10]. On the monetary side, the PBoC has resumed bond purchases and could become more supportive of CNY, though the currency’s limited yield advantage versus other EM FX suggests constraints on aggressive easing as a tool for attracting capital [p.23, p.25].
KKR 2026 Outlook	Official fiscal stimulus is set around a 4% of GDP deficit, with an “augmented” deficit near 8.5% of GDP once special central government bonds and local special‑purpose vehicles are included, while PBoC policy is expected to ease a further 20–30bp even though real rates remain elevated [p.50]. This mix is judged supportive but insufficient to close the output gap or break deflation without a deeper pivot toward services, deregulation (“less control is the biggest stimulus”), and expanded social spending to reduce precautionary savings [p.49–51]. Policy constraints center on the limited effectiveness of broad stimulus when labor, housing wealth, and the safety net are structurally weak, raising the risk of a persistent deflationary equilibrium [p.45, p.48–50].
JPM Outlook	n.a.
Stifel Outlook	n.a.
TRowe Outlook	The PBoC appears reluctant to ease and prefers quantity‑based tools that direct credit to favored sectors rather than broad monetary loosening, with only one potential rate cut in early 2026 described as “not out of the question” rather than the base case [p.4–5]. Stimulus measures should support growth but are unlikely to deliver a material boost given structural constraints, underscoring limited appetite for large‑scale, generalized easing [p.5].
RIC 2026 BAML	n.a.
UBS Year Ahead	Policy support in China leans on targeted fiscal measures—such as subsidies to bolster consumer spending and new support for manufacturing and technology—within the framework of the 15th Five Year Plan rather than large-scale broad stimulus [p.23][p.25][p.31]. Monetary and FX policy is used to support stability and gradual appreciation of the yuan, with the PBoC guiding CNY fixings stronger and facilitating conversion of elevated FX deposits against a backdrop of a resilient current account [p.43].

Investment stance on China equities — Overall weightings, sector tilts (AI/tech vs old economy), and valuation arguments

Source	Content
Blackrock Outlook	Tactical stance on China equities is neutral, with a preference for sectors such as AI, automation, power generation, and a continued favoring of China tech within that neutral view [p.16]. Justification centers on the balance between steadier U.S.–China trade and domestic headwinds from property stress and demographics rather than explicit valuation metrics [p.16].
Goldman Outlook - Summary	China is viewed as “more appealing” but requires highly selective, policy‑aware stock picking, with preferred themes in advanced manufacturing, AI, robotics, EVs, clean energy, biotech, fintech, resilient consumption, and high‑dividend defensives [p.7]. Attractive valuations relative to global peers and light global investor positioning create scope for inflows, but sustainability depends on real earnings growth rather than liquidity alone, especially given tariff and policy‑shock risks [p.10].
Brookfield Outlook	n.a.
Barclays Outlook	China is characterised as “a land of opportunities for investors,” with the second-largest economy seen as deserving a place in a well-diversified portfolio despite structural challenges and elevated volatility [p.8]. The transition from a high single-digit growth developing model to a mid-to-low single-digit, more mature one is expected to create attractive entry points, offering “outsized growth potential at a discount,” with particular strategic emphasis on new engines such as green tech and AI over fading property and low-cost export sectors [p.7–8].
Goldman Outlook	China is treated as a selective value opportunity, with attractive relative valuations, light global positioning, and a rally driven by liquidity and retail flows, but with long-term performance contingent on earnings delivery rather than flows alone [p.20][p.22]. Preferred areas include advanced manufacturing and tech innovation (AI, robotics, EVs, clean energy, biotech, fintech), resilient consumption, and defensive high-dividend payers, while tariff escalation and regulatory shocks are highlighted as key downside risks; the stance is clearly stock-selective rather than broad market beta [p.20][p.22].
MS - 2026 US Equities Outlook - The Rolling Recovery Is Here	n.a.
JPAM Outlook	n.a.
HSBC Outlook	Mainland China equities are overweight in the global allocation, with a barbell strategy between (1) AI/innovation champions (AI cloud and agents, software, physical AI, AI‑enabled biotech) and (2) high‑dividend, quality income stocks supported by “anti‑involution” reforms and shareholder‑friendly policies [p.6, p.9–10]. Foreign investors are underweight but seen adding exposure given tech developments, while local investors are rotating more into equities and domestic bonds as risk appetite improves [p.6]. Valuations are described as having been driven up by 2025 inflows yet still attractive enough to underpin further re‑rating, especially in conjunction with policy support and innovation themes [p.5–6].
KKR 2026 Outlook	Public‑equity performance in China is expected to “exceed investor performance” alongside Japan and Korea, with emphasis on corporate reform and capital‑light models rather than old‑economy property or heavy industrials [p.22]. Sector‑wise, innovation areas such as AI and pharmaceuticals are highlighted—AI investment of 0.5% of GDP directly and 3.5% including related ICT is seen adding 0.3–0.8pp to annual growth, while internet platforms pursue more capital‑efficient AI (capex/revenue 8–10% vs ~16% for U.S. hyperscalers), reflecting a preference for scalable, asset‑light tech over capex‑intensive sectors constrained by semis export controls [p.49–50]. Asia overall is described as under‑owned across Equities, Infrastructure, and Credit, implying room to add China selectively within a broader “own more Asia” tilt [p.8, p.22].
JPM Outlook	China is treated as an earnings laggard (“except for China”) in the global comparison, implying less conviction in broad China equity beta [p.8]–[p.9]. Within Asia’s AI theme, technology sectors in Offshore China are cited as beneficiaries of the ongoing AI/semi/cloud/robotics cycle, suggesting a preference for China tech exposure over the broader market but without explicit allocation or valuation detail [p.9].
Stifel Outlook	n.a.
TRowe Outlook	China is framed as a tactical opportunity set rather than a strategic overweight, with structural headwinds, slower growth, and geopolitical uncertainty necessitating high selectivity [p.9]. Regulatory attitudes have softened and policy is encouraging private enterprise, while domestic AI large language models such as DeepSeek have sparked interest in select platform companies that could benefit from AI‑driven advertising and cloud growth, reinforcing a tilt toward AI/tech over old‑economy sectors [p.9].
RIC 2026 BAML	China equities are rated constructively within the “BIG” framework (“long China”) and the China Equity Strategy team “remains constructive on the China market” on the back of a 2026 “Fed put/Trump put” and China’s technology advancement, but advises locking in gains after a strong run, accumulating on corrections, and rotating more defensively into year‑end due to limited near‑term catalysts and continued earnings downgrades [p.17]. MSCI China trades at about 13.8x forward P/E versus a 12x long‑term average, so the bullishness rests more on medium‑term tech upgrading and a weaker dollar/global rebalancing than on deep‑value valuations [p.3, p.17].
UBS Year Ahead	Chinese equities are viewed constructively, with support from stronger domestic liquidity, robust earnings, and rising retail flows, though overall economic growth is described as muted and valuations as above historical averages but still well below prior peaks, making US–China tension-related dips potential entry points [p.31]. Within this, China tech stands out as a “high-conviction idea within global equities,” with 2025 AI innovation across the value chain, Chinese AI model leadership, strong policy backing, appealing valuations at a discount to global peers and below historical highs, and expected strong earnings growth driving further gains in 2026 as illustrated by rising EPS and price projections for Hang Seng Tech [p.31–32].

Asia’s AI / semiconductor / data-center role — How China, Taiwan, Korea, India, Japan are positioned in AI chips and power-hungry infrastructure

Source	Content
Blackrock Outlook	The AI theme has broadened to benefit China, Taiwan and South Korea, with China enjoying specific advantages in AI infrastructure thanks to rapid build-out of power generation and transmission, lower-cost solar and batteries, and a focus on more energy‑efficient AI models like DeepSeek [p.9, p.15].
Goldman Outlook - Summary	Emerging markets are described as leading in AI and chip innovation, with standout companies in China, India, South Korea, and Taiwan driving global tech growth [p.8]. Taiwan’s TSMC dominates sub‑10nm chip manufacturing used in AI and 5G and plans about $165bn of advanced semiconductor capex in the US, underscoring Asia’s centrality to the AI hardware stack [p.8].
Brookfield Outlook	n.a.
Barclays Outlook	Exposure to AI-related supply chains in Asia is highlighted as a key reason emerging market equities are attractive [p.15]. China’s domestic strategy explicitly prioritises AI and advanced manufacturing as part of its productivity and supply-chain upgrading agenda [p.7–8].
Goldman Outlook	Emerging markets in Asia—especially China, India, South Korea, and Taiwan—are described as leading in AI and chip innovation, with standout companies driving global tech growth, and TSMC in Taiwan dominating sub‑10nm AI/5G chip manufacturing and planning about $165bn of US advanced manufacturing investment [p.20]. Asia’s centrality to economic security is underlined by China’s ~60% share of rare earth production and Taiwan’s ~90% share of leading-edge semiconductor output, while a broader note flags that two‑thirds of new data centers and a third of thermal power plants (including in Asia) are in high water‑stress regions, implying physical constraints on power‑hungry AI infrastructure; Japan’s specific AI/chip role is referenced indirectly via policy support for AI, semiconductors, quantum, and related tech [p.20][p.45][p.46].
MS - 2026 US Equities Outlook - The Rolling Recovery Is Here	n.a.
JPAM Outlook	Asia is framed as a high‑tech manufacturing hub, with China highlighted as moving up the value chain under Made in China 2025 and pursuing technological self‑reliance, and with rapid AI progress illustrated by China’s DeepSeek as a non‑U.S. innovator [p.6, p.14]. Broader supply‑chain “technological upgrades” across APAC and China+1 manufacturing expansion in ASEAN are noted [p.14].
HSBC Outlook	Asia is the world’s technology hardware powerhouse and largest consumer/manufacturer, with national AI strategies backed by funding and tax incentives in China, Japan, South Korea, India, Singapore, Malaysia and Indonesia, positioning the region at the centre of the AI and data‑centre build‑out [p.9–10]. Asia Pacific’s data‑centre capacity is projected to grow fastest globally at 13.1% CAGR in 2025–2030, with installed capacity in Asia Pacific and China expected to nearly triple from 2020 levels, benefiting Asian chipmakers, semiconductor equipment, and power/smart‑grid suppliers [p.9–10]. Country‑specific positioning highlights South Korea and Japan for AI‑linked hardware and governance reforms, and China for AI cloud and innovation champions [p.6, p.9–10, p.19–20].
KKR 2026 Outlook	AI and digitalization are framed as multi‑year themes across Asia, with China devoting about 0.5% of GDP (~$90bn) to AI directly and 3.5% including ICT, focused on capital‑efficient models because of semiconductor restrictions, while Japan channels “Abe‑ism 2.0” industrial policy and fiscal support into AI, semiconductors, cybersecurity, and power infrastructure via large supplementary budgets and ultra‑long JGB issuance [p.49–52]. Corporate capex in Japan is re‑accelerating in software, automation, and labor‑saving technologies, and regional supply‑chain re‑wiring plus intra‑Asia trade are expected to support manufacturing, logistics, and digital‑infrastructure build‑out [p.17–20, p.49–52].
JPM Outlook	AI investment and adoption are described as increasingly powering international earnings growth “especially in Asian emerging markets,” with the theme set to broaden across semiconductors, cloud/internet, and robotics [p.2], [p.9]. This directly supports technology sectors in Offshore China, Korea, Taiwan, and Japan, and is “increasingly important” for EM indices where tech (heavily Asia-based) is 27% of the benchmark [p.9]. A Chinese AI firm (Deepseek) is highlighted as evidence of China’s capability to deliver disruptive, cost‑efficient large language models, underlining Asia’s central role in AI hardware and software competition [p.10].
Stifel Outlook	n.a.
TRowe Outlook	Japan is positioned at the heart of global supply chains for semiconductors and robotics, leaving its companies well placed to benefit from the ongoing AI‑related capex cycle [p.9]. China’s AI exposure appears mainly through domestic platform companies leveraging large language models like DeepSeek to drive advertising and cloud revenue growth [p.9].
RIC 2026 BAML	n.a.
UBS Year Ahead	Asia’s macro and equity outlook is heavily tied to an “expanded build-out of tech supply chains” and positive AI capex across the region, which are key growth tailwinds for APAC ex‑Japan and a central reason for expecting double-digit returns in Asia ex‑Japan equities by end‑2026 [p.23][p.32]. EM and Asia equity indices are now heavily tech-weighted—with tech-related sectors exceeding 40% of the MSCI EM Index—providing diversified exposure to non‑US AI/tech including China [p.32].

Japan as an Asia equity and rates outlier — Views on growth, BoJ hikes, reforms, and preferred sectors vs rest of region

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Blackrock Outlook	Japanese equities are a preferred tactical and strategic overweight, supported by strong nominal GDP, healthy corporate capex, and governance reforms such as the decline of cross-shareholdings [p.15–16]. On rates, Japanese government bonds are underweight on expectations of rate hikes, higher global term premia, and heavy bond issuance pushing yields higher, reinforcing Japan’s outlier status versus the region [p.16].
Goldman Outlook - Summary	Japanese equities are seen as supported by moderating inflation, stable monetary policy, robust capex and consumption, and a weaker yen into 2026, with BoJ rate hikes expected given inflation above target for 41 months and solid growth [p.7, p.14]. Corporate governance reforms are expected to keep unlocking shareholder value via more dividends and buybacks, and a Takaichi‑led, looser‑fiscal government is viewed as especially supportive for defense, nuclear, technology, AI, semiconductors, quantum, space, advanced medicine, and cybersecurity, while expanded NISA and a shift from cash to risk assets bolster domestic flows [p.7].
Brookfield Outlook	n.a.
Barclays Outlook	n.a.
Goldman Outlook	Japanese equities are viewed positively heading into 2026, supported by moderating inflation, stable monetary policy, potential fiscal support under Takaichi, robust capex and wage-driven consumption, a weaker yen, tourism, and continued corporate governance reforms that should sustain dividends and buybacks even at above-average valuations [p.20]. BoJ is expected to hike rates given inflation running above target for 41 months and robust growth, and policy priorities under Takaichi (defense, nuclear, AI, semiconductors, quantum, space, advanced medicine, cybersecurity) plus a shift of households into risk assets via NISA distinguish Japan from the rest of Asia as a reform- and policy-driven equity and rates story [p.20][p.24].
MS - 2026 US Equities Outlook - The Rolling Recovery Is Here	n.a.
JPAM Outlook	Japan is characterized as having a mature multifamily residential market with constrained rental supply and “robust wage growth in a reflationary environment,” making it a key APAC living‑sector opportunity alongside relatively stable office valuations and declining supply [p.15, p.21]. Corporate governance reforms and rising shareholder‑friendly activism in Japan are highlighted as structural supports for equity value creation [p.48–49].
HSBC Outlook	Japan is overweight, benefiting from the AI boom, corporate governance reforms, and a pro‑stimulus policy stance under PM Sanae Takaichi that supports a “sustained reflation trend,” with corporate actions such as a 220% y‑o‑y surge in share buybacks in April 2025 underpinning earnings and ROE improvement [p.6, p.9–10].
KKR 2026 Outlook	Japan is portrayed as a structural outperformer, with GDP growth of 0.9–1.0% in 2026–27 (above consensus) and CPI around 1.8–2.0%, underpinned by three “Goldilocks blocks”: negative real rates, a shift to positive real wage growth, and nominal GDP growth persistently above nominal interest rates [p.29, p.51–54]. BOJ policy normalization is expected to be gradual, with the policy rate reaching 1.5% and 10Y JGB yields ~2.1% by 2027, while a stronger yen (USD/JPY 137–147 range) reflects improved macro fundamentals and supports Japan’s outlier status in rates and FX [p.66–67, p.74]. On equities, governance reform, high cash balances (~17% of assets), rising activism, and strategic investment in AI, semiconductors, power infrastructure, clean energy, and defense make Japan “ground zero for corporate reform” and a core overweight versus the rest of Asia [p.8, p.22, p.51–53].
JPM Outlook	Japan is singled out for strong structural support: high nominal government investment growth (7.3% annual average 2022–26) and likely increased fiscal spending targeted at households, combined with accelerating real wages, are expected to provide a reflationary boost [p.9]. Alongside this macro backdrop, Japan benefits from structural themes—higher nominal growth, AI exposure, and shareholder‑friendly policies (including buybacks)—supporting value sectors such as financials and making Japanese equities a key international and Asian opportunity [p.2], [p.9]. The broader context is one of ongoing normalization and reflation relative to the rest of Asia.
Stifel Outlook	n.a.
TRowe Outlook	Japan has moved past deflation, with labor shortages and food inflation supporting wage gains and a more inflationary environment, while expected fiscal stimulus in 2026 should further support growth and push the BoJ to hike policy rates more than markets anticipate, in a gradual but outlier tightening path versus other major central banks [p.4–5]. Japanese equities stand out for attractive valuations, robust cash flow, and improved corporate governance, and given Japan’s central role in semiconductor and robotics supply chains, its market is positioned to benefit from the AI capex cycle more than most regional peers [p.9, p.17].
RIC 2026 BAML	Japan is a high‑conviction equity overweight with end‑2026 targets of TOPIX 3,700 and Nikkei 55,500, underpinned by a new Takaichi government aiming to accelerate nominal growth, ongoing corporate reforms, and the potential for P/E re‑rating if ROE exceeds 10% in 2026 [p.2, p.15, p.17]. Macro projections show moderate growth (GDP 1.3% in 2025, 0.7% in 2026, 0.8% in 2027) with sustained inflation (CPI 3.1%, 1.9%, 2.1% over 2025–27) and a 10y JGB yield around 2.00%, and the equity strategy emphasizes stocks with strong pricing power in an inflationary environment rather than a detailed sector list [p.2, p.17, p.19].
UBS Year Ahead	Japan is highlighted within Asia for a domestic consumption upturn and for a distinct interest-rate path, with GDP growth projected at 0.7% in 2025 and 1.0% in 2026, alongside an expected BoJ hiking cycle that takes the policy rate from 0.50% to 1.00% by end‑2026, underpinning a gradual yen recovery versus the USD as US–Japan yield differentials narrow [p.23][p.43][p.59–60].

India and other EM Asia growth stories — Demographics, digitalization, urbanization, and intra-Asia trade as alternative engines to China

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Blackrock Outlook	n.a.
Goldman Outlook - Summary	India is highlighted as a core EM growth and earnings story, with strong GDP growth supporting steady corporate profits, a powerful digitalization trend (digital payments up threefold since June 2021), and favorable demographics (65% of the population under 35; median age 28, about ten years younger than the US and China) underpinning long‑term consumption [p.7–8]. EM Asia more broadly benefits from attractive EM equity valuations (~40% P/E discount to the US) and expected continued monetary easing on the back of a subdued dollar and lower oil prices [p.7, p.14].
Brookfield Outlook	India is a major structural growth story, with population growth and the projected migration of 350 million people to cities by 2050—“one of the largest urban shifts in history”—and roughly 70% of rental housing informally managed, creating a deep opportunity for institutional rental platforms [p.24]. Intra‑Asia‑Pacific trade has “surged since 2019,” with container volumes up 13% in 2024 and some markets skipping legacy models to adopt AI‑driven fulfillment and multilevel distribution, supporting logistics and infrastructure demand [p.24].
Barclays Outlook	Broader EM Asia is discussed mainly through valuation and thematic lenses, with emerging market equities described as “inexpensive versus developed markets” and “under-owned,” and benefiting from exposure to AI-related Asian supply chains and a potentially softer dollar as US growth normalises [p.14–15]. Private consumption exceeds 60% of GDP in India versus 40% in China [p.8].
Goldman Outlook	India is presented as a secular high-growth story where strong GDP growth supports steady earnings, underpinned by very favorable demographics (65% of the population under 35; median age 28, about ten years younger than the US and China) and rapid digitalization, evidenced by digital payments tripling since mid‑2021 [p.20]. EM Asia more broadly is framed as a key beneficiary of AI/chip innovation and EM valuation discounts, with a focus on fundamentally strong, domestically oriented companies as alternative growth engines to China [p.20].
MS - 2026 US Equities Outlook - The Rolling Recovery Is Here	n.a.
JPAM Outlook	India is cited as having a middle class of over 350 million people, comparable to China’s 400–500 million, supporting consumption and trade volumes, while many ASEAN economies are experiencing “significant manufacturing expansion” driven by China+1 diversification, favorable demographics, and technology‑driven transformation [p.14, p.32]. Intra‑APAC trade accounts for more than 50% of total trade for most regional economies, with the U.S. under 20%, underscoring intra‑Asia linkages as alternative growth engines [p.19–20].
HSBC Outlook	India and broader EM Asia are framed as part of Asia’s role as a “global growth engine,” supported by accommodative policy, improving trade dynamics, and AI/digitalisation strategies, with India explicitly having a national AI strategy and benefiting from supply‑chain diversification and regional capital inflows [p.10, p.19]. Equities in India are rated neutral pending clearer evidence that reforms translate into stronger growth and earnings, while Singapore, South Korea and ASEAN benefit from trade, finance, technology investment and intra‑Asia flows [p.19–20].
KKR 2026 Outlook	India is characterized as “the best play on consumption upgrades,” with affluent and upper‑middle income households rising almost tenfold between 2010 and 2028, driving demand for financial services, healthcare, education, domestic tourism, and digital platforms [p.8, p.17]. ASEAN‑5 (ex‑Singapore) are on track to reach upper‑middle income status by around 2030, supported by demographics, urbanization, digitalization, financial inclusion, and supply‑chain diversification into the region [p.17–18]. Intra‑Asia trade is labeled a “mega theme,” with the intra‑regional share rising from 46% in 1990 to 60% in 2024 and a projected 68% by 2030, reinforcing alternative growth engines to China via regional manufacturing, logistics, consumer markets, and infrastructure/credit opportunities [p.19–20].
JPM Outlook	India’s earnings growth (along with Japan and the eurozone) has broadly kept pace with the U.S. since 2020, in contrast to China, supporting a constructive view on parts of EM Asia ex‑China [p.8]. Asian emerging markets overall are identified as prime beneficiaries of structural themes—AI, higher nominal growth, and shareholder‑friendly policies—indicating that EM Asia is an attractive alternative engine of equity returns [p.2].
Stifel Outlook	n.a.
TRowe Outlook	Ex‑China EM, including Asian markets, carries a broadly positive outlook supported by favorable demographics and ongoing structural reforms in key countries such as India, which, alongside others, benefit from global supply chain diversification amid trade tensions with China [p.9].
RIC 2026 BAML	India is viewed as a solid growth story with GDP at 7.2% in 2025, 6.5% in 2026, and 7.0% in 2027 and CPI rising toward the 4–5% range, but equities are rated Neutral as Nifty is expected to return ~11.5% in 2026 on ~14% earnings growth with valuations already rich at ~21x forward EPS (+1SD) [p.2, p.17]. Sector stance is overweight Financials, Real Estate, Autos, Power; underweight Industrials and Cement; cautious on IT, Steel, Energy, and favoring defensives like Telecom and Hospitals plus selective SMID post‑correction, while broader EM Asia is supported in aggregate by the weaker‑dollar “global rebalancing” theme [p.3, p.17].
UBS Year Ahead	India is identified as a key regional growth story, with GDP growth around 6.4–6.5% in 2025–2028 and a domestic consumption upturn plus rising corporate profits supporting its equity appeal within Asia ex‑Japan [p.23][p.32][p.59]. APAC ex‑Japan overall is expected to grow just under 5% in 2026, driven by tech supply-chain build-out, domestic-demand revivals (notably India and Japan), and a revival in regional credit growth that benefits banks and consumer-related opportunities [p.23].

Geopolitics, trade controls, and economic security — US–China rivalry, rare earths, reshoring, and their impact on Asian assets

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Blackrock Outlook	U.S.–China rivalry is described as the defining geopolitical feature, spanning trade, technology, energy, and defense with AI at the center, and both sides working to curb strategic dependencies that can be weaponized [p.10]. This fragmentation and supply-chain “rewiring” supports selective EM and Asian beneficiaries like Vietnam [p.10, p.15–16].
Goldman Outlook - Summary	n.a.
Brookfield Outlook	n.a.
Barclays Outlook	China’s dominance of rare earths (~70% of global production) is highlighted as a strategic lever in US–China trade tensions, with export restrictions imposed in 2025 in response to higher US tariffs and then temporarily suspended for a year under a short-term deal, while the West begins building alternative supply chains that will take years [p.8]. Trade tensions and a less globalised, more multipolar world are key reasons China must move up the value chain and diversify trade partnerships [p.8], and for investors, these frictions plus China’s rare earth leverage are expected to sustain volatility in Chinese and broader Asian assets even as they also support selective opportunities, especially in AI-related supply chains in Asia [p.8, p.15].
Goldman Outlook	US–China relations are depicted as structurally adversarial despite some tariff and rare earth progress after a Trump–Xi meeting, with “geopolitical dynamics driving the decoupling” still dominant, keeping trade/tech tensions a key overhang for Asian assets [p.6]. Economic security concerns center on Asia’s concentration in critical inputs—China’s ~60% share of rare earth production and Taiwan’s ~90% share of leading-edge semiconductors—driving reshoring/diversification in the US and Europe, while continued US LNG exports to Asian buyers highlight how energy security and the shift away from coal feed into the region’s asset outlook [p.45].
MS - 2026 US Equities Outlook - The Rolling Recovery Is Here	US–China economic tension is addressed through US tariff policy, with tariffs framed as a stable, ongoing tool for rebalancing the US current account and a bull‑case assumption that trade dynamics with China move into a “de‑escalatory steady state” where tariff impacts are muted; manufacturing reshoring is discussed as favoring US industrials after two decades of post‑China‑WTO offshoring [p.9, p.22, p.33–34].
JPAM Outlook	APAC trade has been “proactively diversified” away from the U.S. as part of a de‑risking strategy, with intra‑regional trade exceeding 50% of exports and higher U.S. tariffs having had only a “minimal impact” on APAC industrial real estate because the U.S. share of trade is below 20% for most economies [p.19–20]. Geopolitical and trade‑war escalation, including potential new tech export controls, is acknowledged as a risk to trade flows, supply chains, and capital flows [p.19–20, p.32].
HSBC Outlook	Asia EM and Asia‑Pacific assets benefit from a de‑escalation of trade tensions following recent US trade deals, with improving trade relations (e.g., for South Korea) supporting equity and FX inflows [p.5, p.20]. CNY could gain from a US trade truce that boosts domestic activity and reduces trade uncertainty, while renewed US tariffs or export‑control escalations are acknowledged as a key risk to China and tech‑heavy Asian exporters [p.24–25].
KKR 2026 Outlook	Great‑power competition and “Security of Everything” dynamics—manifested in tariffs, technology export controls (especially semiconductors/AI hardware), and supply‑chain reshoring—are treated as key macro risks that could tighten global trade, weigh on China’s export and capex outlook, and test the region’s deflation resilience [p.18, p.27–33, p.44–45]. KKR’s China baseline explicitly assumes U.S. tariffs in the 25–30% range rather than a more punitive 40–45%, and notes that harsher trade outcomes would meaningfully lower Chinese growth and worsen deflation risk [p.44–45]. At the same time, geopolitical diversification supports intra‑Asia trade and FDI into India, ASEAN, Japan, and Korea (including in semiconductors, AI, power infrastructure, and “economic security” sectors), creating both risk and opportunity for Asian assets [p.18–20, p.49–52].
JPM Outlook	n.a.
Stifel Outlook	n.a.
TRowe Outlook	Tariffs and trade tensions, especially those involving China, are described as a slow‑burn uncertainty whose ultimate impact on emerging markets will take years to play out, with the China tariff situation “particularly unsettled” [p.4]. China’s anti‑involution campaign, which reduces production of frequently exported goods and raises their prices, interacts with these trade frictions, while ex‑China EM (including Asia) is positioned to benefit from global supply chain diversification and reshoring trends that redirect capex and trade flows away from China [p.4, p.9].
RIC 2026 BAML	n.a.
UBS Year Ahead	US–China rivalry is flagged as a top risk, with intensified brinkmanship around tariffs, rare earth exports, and AI chip sales in 2025; while past escalations have ended in negotiated agreements, further episodes remain likely and could disrupt China/Asia trade and tech supply chains [p.47]. The constructive outlook on CNY and Asian assets assumes progress in US–China trade talks and a relatively stable truce, with yuan appreciation supported by stronger fixings and a resilient current account, and a reversal via broad new tariffs or harsher semiconductor controls would be a major negative trigger, especially for China tech and regional AI-related hubs [p.23][p.43][p.47].

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