Anuj Arora, head of emerging markets and Asia Pacific equities, says the key is separating geopolitics from economics. “All the geopolitics and news have dominated the media this year around tariffs, [but] the economics really haven’t changed,” he says, pointing out that 85%–90% of listed company revenues in most Asian markets are generated domestically. Korea, Taiwan and Japan are more export-exposed, yet are highly embedded in global supply chains with pricing power in niches such as memory and logic. “Most of the tariff-related cost increases have been absorbed by the American consumers,” he adds.
Treves and Arora also see a decisive improvement in shareholder returns across North Asia, echoing the “Abenomics” governance experience. Korea’s “Value-up” push and China’s nascent shift toward buybacks and higher payouts are early but meaningful, they say. “Korea is the next story,” says Arora, noting the index’s strong showing since the policy drive began, with China now registering net buybacks for the first time in MSCI index history. If the trend persists, he believes that it is supportive for multiples.
Policy and the cycle
JPMAM’s Asia chief market strategist Tai Hui describes the global backdrop over 2025–2026 as “softer growth and lower rates”. The US labour market is cooling while corporate investment in technology remains firm, which points to a soft landing and continued earnings delivery. The Federal Reserve restarted rate cuts in September, with markets expecting further easing into year-end. Historically, equity returns 12 months after the first cut depend on context. In “insurance” cutting cycles such as 1995, 1998, 2019 and 2024, equities tend to do well, Hui says, in contrast to recessionary episodes like 2001 and 2007.
See also: Navigating change: Unlocking opportunities in China’s equity market
Against this macroeconomic backdrop, Hui emphasises portfolio construction over market-timing. Fixed income’s narrower dispersion of outcomes provides ballast, but equities should remain core in a soft-landing scenario. With stock-bond correlations less reliably negative since 2022, he argues for a broader tool-kit including alternatives and option-based income strategies.
On Asia’s trade, Hui says exports have held up “reasonably well” despite tariff noise, underpinned by secular demand for semiconductors and AI hardware. He adds that listed revenue exposure is largely domestic in markets like China, Indonesia, the Philippines and Thailand. Taiwan, Korea, Hong Kong and Japan are more external, yet their competitive moats allow them to pass on costs rather than discount prices.
For China, Hui sees a mixed picture: diversified exports, targeted consumer support and ongoing property drag. The upcoming Fourth Plenum and the 15th Five-Year Plan (FYP) are pivotal for guidance on tech self-sufficiency, market deepening and job creation. “That could sustain the China market rally that we’ve seen in the last few months,” he says.
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For Arora, rather than trying to time the China market or wondering if it is investable, he believes that “the right question is how to invest in China during deflation”. With 10-year government bond yields near 1.5%, he says high-income equity strategies screen attractively versus bonds, while genuine growth franchises command premiums when nominal GDP slows. He highlights China’s AI cycle as “completely uncorrelated from the Western world”, starting later and populated by local champions, which broadens opportunity.
In a more recent comment from Shanghai-based global market strategist Chaoping Zhu, on China’s 3Q data, he says that real GDP growth slowed to 4.8% y-o-y, in line with expectations. Zhu expects cuts to the reserve requirement ratio and policy rates, alongside additional government bond issuance by year-end, to support credit growth. He sees the 15th FYP focusing on tech self-sufficiency and supply-chain security, with reforms to boost consumption. He also points to strong household savings and policy efforts to improve market liquidity and governance since last September, which have underpinned rebounds in A-shares and Hong Kong listings. High-growth areas such as semiconductors, AI infrastructure and new energy have led, though elevated valuations may consolidate as macro data fluctuates.
JP Morgan Asset Management CEO George Gatch: We are going to bring the best of our global capabilities to Asia Pacific, delivered with local expertise
Asia essential to the AI revolution
Beyond policy rates, Arora singles out the US dollar as “the most important macro event of the year”. He argues the long dollar bull market that began in 2010 is “being challenged,” citing an episode where the currency failed to rally during a global risk-off, breaking the “dollar smile”. If the cycle has indeed turned, he says, emerging markets (EM) benefit from easier domestic liquidity, scope for rate cuts and revived local demand. He uses Brazil as an extreme illustration of high real rates that could compress, sparking credit and consumption upcycles, with implications across EM Asia.
Technology is the third leg of the thesis. “You simply cannot have the AI revolution without the Koreans and the Taiwanese, Japanese and Chinese,” says Arora. He notes that about 65% of semiconductors are manufactured in the region and that many North Asian leaders trade at roughly half the multiples of comparable US peers despite owning critical nodes in the stack. In high-bandwidth memory, for example, there are only three producers globally; two are in Korea and are market leaders, yet still valued at a discount to the US competitor. In Arora’s view, North Asia offers easier access and at a better discount for investors who are eyeing AI to be the next industrial revolution.
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Treves adds that clients are reassessing the relative risk and cost of capital. US equities remain high quality but already dominate many portfolios and, in places, look “richly valued”. Against this, Asia offers a set of idiosyncratic earnings drivers less tied to US macro, including domestic consumption in South and Southeast Asia, the AI capex cycle in North Asia and mix-improving shareholder returns in China and Korea.
At the firm level, CEO George Gatch says JPMAM is leaning into innovation to match this more complex cycle. Alternatives, he says, help clients access “uncorrelated return streams” that diversify portfolios in a world of higher volatility. The firm is structuring institutional-quality private market capabilities for private wealth while insisting public markets remain central. “Public markets are not dead,” he says, highlighting derivative-income strategies that deliver higher income with lower volatility and the rapid growth of active ETFs, an area where JPMAM now runs 149 funds globally with over US$300 billion ($388 billion) in assets. He adds that active ETF demand in Asia is faster than expected.
Gatch also points to integration across public and private markets as a next frontier, combining the firm’s equity research with private market insights to analyse industries through the full company life cycle. He underscores the firm’s local presence of about 1,500 staff across Asia Pacific and a history of on-the-ground investing dating back to the early 1970s in Hong Kong and the early 1980s in Japan. “We are going to bring the best of our global capabilities to Asia Pacific, delivered with local expertise,” he says.
