However, the US investment story has long been strong until US President Donald Trump came into power and introduced a lot of uncertainty into the market. “The only certain thing today is uncertainty,” says Nayar.
Although this oxymoron statement is true and makes it difficult for investors to make investment decisions today, Nayar has some pointers on navigating today’s market conditions.
The way he sees it, Nayar says “diversification” is the buzzword and will likely be the theme for a while, at least as long as Trump is in power.
“It’s not about putting your eggs in all the [different] baskets — it’s about putting them in the right ones,” he says, adding that it is not about being spread too thinly but being an active investor and making calculated decisions.
See also: ‘Realistic’ investors here prefer steady earnings and dividends: PhillipCapital’s Chew
While the US market looks less attractive, he views Asia as offering better valuations, stronger growth potential and less correlation to Western economic cycles.
A shift in global allocation
US equity markets have long outperformed much of the world, bolstered by stable institutions, leading-edge innovation and a supportive policy environment under the previous administration. However, that narrative is now under strain following the return of the Trump administration earlier this year. A mix of higher tariffs, rising inflation and tighter immigration policies — all of which directly constrain GDP potential — has created significant overhangs. What were once tailwinds for the US economy have now turned into headwinds.
See also: New opportunities emerging in China from global trade tensions
“The tariffs, especially. The level of tariffs imposed. It inhibits the US growth story,” says Nayar, who is actively diversifying away from the US exceptionalism storyline.
One of Nayar’s key messages is to rethink the reliance on global indices. With around 75% of global benchmarks still weighted towards the US, passive investors are often overexposed. “That’s not real diversification,” he says. Instead, investors should take active positions in markets where they see structural opportunity and margin of safety.
Asia fits that description. “Valuations are lower, fundamentals are improving and domestic themes, like consumption in India or supply chain localisation in Japan, are driving returns,” Nayar explains. He argues that the current environment presents the best entry point in years for long-term investors.
This shift is prompting a re-evaluation of where capital should be deployed. “Long-term investors are no longer willing to pay a premium for a story that doesn’t deliver premium growth,” he says. That opens the door to markets like China, Japan and India, which offer stronger fundamentals at more attractive valuations.
Another strong commonality among these three Asian markets is strong domestic consumption. While China has been hit with exceptionally high tariffs by the US, its domestic consumption story remains strong. At the same time, Japan and India are likely to be less affected by changes in US policies.
While these three markets benefit from a large domestic base, they also have a strong policy environment focused on stability and consumption. In China, the government has pledged GDP support equivalent to 2% of output to cushion the blow from trade disruptions and weak exports. Nayar views that although market sentiment remains fragile, any strong policy execution could lead to a rerating.
Japan, meanwhile, is seeing rising domestic demand fuelled by wage growth and structural shifts away from reliance on exports. Japanese corporations, particularly in the small- and mid-cap space, are tapping into domestic consumption trends and reshoring their supply chains from China to Vietnam.
For more stories about where money flows, click here for Capital Section
India stands out even further. Its economy is largely insulated from US trade tensions, with only 2% of exports directed at the US. High interest rates have curbed consumption, but inflation is moderating, giving the central bank room to ease. “India is in a unique position,” says Nayar. “It’s not just about valuation. There is a structural growth story here, supported by reforms and a domestic-focused economy.”
Defensive by design
In this climate of geopolitical risk and economic uncertainty, Nayar says resilience is the priority. “We favour more defensive investment styles,” he says. Two strategies stand out: income-generating equities and low-volatility portfolios.
Dividend stocks, especially in the financial and utilities sectors, offer repeatability and stability. Many Asian financial names continue to deliver steady income while avoiding the high valuations and regulatory uncertainty seen in US tech and growth names. “We’re focusing on companies that can deliver stable earnings and cash flows through cycles,” adds Nayar.
While Nayar does not single out a specific sector as defensive in the current climate, he acknowledges that certain markets may offer safe-haven appeal. Singapore is one such example. “Singapore has a different dynamic than the other Asian markets I’ve mentioned [China, Japan and India]. It does not have a trade deficit with the US and does not export much there. It has an open economy and a stable government, which is increasingly important to investors,” he says, adding that this creates a sense of predictability that is preferred for long-term investing.
Overall, Eastspring is a bottom-up stock picker. While it stays informed on macro happenings, the firm looks for opportunities in individual stocks and focuses on fundamentals, opportunities and risk insulation.
Meanwhile, low-volatility strategies also offer a buffer. These portfolios tend to avoid high-beta sectors and are diversified across geographies and industries. “Utilities, industrials and less cyclical sectors have outperformed this year, particularly in volatile periods,” he says.
Rethinking risk
The backdrop of 2025 is one of policy volatility. Central banks across the world are moving at different speeds. The Fed, for instance, has signalled caution on rate cuts despite market pressure. Inflation remains a concern and there is increasing evidence that US corporations are passing higher prices on to consumers. While the forecast is for an inflationary backdrop, Nayar says there has yet to be a recession story or if a “small recession” is expected.
“Being active is not a luxury; it’s a necessity,” says Nayar. Eastspring maintains a flexible approach to fixed income, tactically adding duration exposure when appropriate. “Nearly all the fixed income we run is active,” says Nayar. He shares that, again, having diverse exposure to markets is essential.
“Our fixed income portfolios have broadly been recommending staying in quality and being really cautious on duration,” he adds.
Recently, credit spreads have widened and at around 4.7%, he views US yields as offering decent entry points. “We think it is an opportunity to add the duration tactically into our fixed income portfolios,” he says.
With the credit market now experiencing a normalisation period, this gives Eastspring a chance to take on a little more risk. “That is what active management is about. It’s actually being able to react and integrate that new information into the market,” says Nayar.
On the other hand, emerging markets have traditionally been seen as higher risk due to policy volatility and external shocks. But Nayar says the risk-reward balance has changed. “US markets now exhibit just as much daily volatility as many emerging markets,” he points out.
Building on that, Nayar also highlights that the US stock markets are trading at a premium, on top of all the new policies causing uncertainty in the US economy; the market is risky today and may be in a correction.
Meanwhile, countries like India and Japan are far less reliant on US trade than Asean exporters.
The historical concept of risk, which is heavily weighted towards US economic performance, is outdated. “Asia’s domestic orientation reduces exposure to US policy shifts,” says Nayar. In fact, many of these markets may be safer in this environment.”
In Asia, central banks have more room to manoeuvre. India and Singapore are expected to cut rates as inflation moderates. China is also likely to ease further in supporting its currency and economy. “We’re seeing a divergence in policy responses, which makes a one-size-fits-all strategy impractical,” he notes.
