“Now, the AI story can continue, there might be more growth and these sorts of things, but on the margin, I think it’s going to be about what other growth stories are there in Asia.”
Van der Linde says the growth stories for 2026 will be bigger than those in technology areas like biotechnology and electric vehicles. “They would be on that particular list as well, but I think in 2026, we are going to look beyond that, and I’m going to give you maybe three examples,” he adds.
Firstly, van der Linde sees the formal retail sector, which comprises registered businesses like department stores and supermarkets, as a bright spot that is “growing over the informal retail sectors.” The latter group includes unlicensed businesses such as street vendors.
“There are still a lot of mom and pop stores, but they can’t compete with the malls and convenience stores. So that’s a growth story,” van der Linde says.
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Secondly, van der Linde says the luxury sector is an opportunity worth looking into. “I think in some of the markets, people want to spend more on themselves, and less on their children, because their children have grown up and have a job for themselves,” he adds.
Thirdly, van der Linde says the financial sector across the whole region will see growth as central banks begin to cut interest rates. “That means corporates want to take on maybe more loans. That offers opportunities here and there across the region as well,” he continues.
Van der Linde’s thoughts on where the markets are headed in 2026 are further expanded in two reports he co-wrote with his HSBC colleagues, Prerna Garg, Adam Qi, and Varun Pai. Both reports were published on Nov 20, the same day van de Linde’s podcast aired.
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In their first report, The year ahead in 2026, van der Linde and his colleagues are overweight on mainland China, Hong Kong, India and Indonesia, and underweight on Taiwan, Korea, Japan, Singapore, and Thailand for 2026.
“As investors look for alternative growth stories across Asia (aside from AI), they might benefit from refocusing on India and Indonesia. Here, fiscal and monetary levers have been pulled that should allow growth to recover in early 2026,” the report states.
India is attractive to the HSBC team because it is “likely to be an outsized beneficiary of any additional money” going into emerging markets. They add that most investment portfolios “can’t really add much more to their Taiwan or Korean holdings” and may turn to India.
HSBC says investors need not fear a selloff of Indian stocks if Chinese stocks continue to rally next year. “It is not foreign funds, but local investors, that drive Chinese equities higher. The dynamics differ this time around. And that’s why we believe India and China can rally at the same time, for completely different reasons,” the report adds.
Van der Linde and his colleagues say Indonesia merits attention because it is set to benefit from the Indonesian government’s “policy initiatives to support growth and a more relaxed monetary policy.” This is on top of the region’s relatively cheap valuations, they add.
“FTSE Indonesia trades at 12.3 times forward earnings, one standard deviation below the average it has traded at in the last 10 years. Consensus is looking for earnings growth to recover from –7% in 2025 to +11% in 2026,” they write.
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Indonesia’s bank dividend yields, which range from 7% to 9%, look attractive compared with the 10-year government bond yield of 6%, van der Linde and his colleagues say. “Current valuations overlook these fundamentals and do not factor in the potential return of growth,” they add.
Van de Linde, Garg, Qi, and Pai say in their report that Indonesia and other Asean countries, like the Philippines, may want to consider emulating Singapore’s Equity Market Development Programme (EQDP). Initiated by the Monetary Authority of Singapore (MAS), the EQDP aims to strengthen Singapore’s equities market.
Thus far, MAS has appointed nine asset managers: Avanda Investment Management, Fullerton Fund Management, JP Morgan Asset Management, Amova Asset Management (formerly Nikko Asset Management), AR Capital, BlackRock, Eastspring Investments, Lion Global Investors, and Manulife Investment Management to invest in Singapore-listed stocks. A total of $3.95 billion out of the $5 billion EQDP fund has been placed with the nine asset managers. The remaining EQDP submissions will be reviewed, and the next phase of appointments will be announced in 2Q2026.
“Ultimately, the aim is to attract more initial public offerings in the space and boost investor participation,” say van der Linde and his colleagues. “It might well work. Small- and mid-caps have enjoyed a rally on the back of it.”
In their second report, 12 stocks for 2026, van der Linde and his colleagues list 12 stocks that will benefit from their 2026 themes.
The picks comprise China’s Harbin Electric (target price: HK$22 ($3.68)), Horizon Robotics (target price: RMB11 ($2.02)), Goldwind Science & Tech (target price: RMB20.40), and Trip.com Group (target price: HK$702); Hong Kong’s BOCHK Holdings (target price: HK$45.20); India’s PB Fintech (target price: INR2,250 ($32.75)) and Phoenix Mills (target price: INR2,110); South Korea’s E-mart (target price: KRW120,000 ($106.34)); Taiwan’s E Ink Holdings (target price: TWD305 ($12.64)); the Philippines’ ICTSI (PHP630 ($13.92)); Singapore’s City Developments (target price: $11); Indonesia’s Sumber Alfaria Trijaya or Alfamart (target price: IDR2,900 ($0.23)).
Joy Wang, HSBC’s head of Asean equity research and Asean property, says City Developments (CDL) is her preferred developer despite gaining by more than a third year to date. In her view, CDL has the “largest residential launch pipeline in Singapore, and is well positioned to take advantage of the next upcycle.”
Wang says shareholders will enjoy a higher return because of CDL’s ongoing capital recycling into higher-yielding assets, higher dividend payouts, as well as its “heavily discounted valuation.” CDL is trading at a 58% discount to its revalued net asset value, she adds.
2025: A year led by AI and China
Earlier in his podcast, van der Linde says Asian equity markets are driven by two stories in 2025 — AI and China.
“Anything that had to do with AI has done phenomenally well, and it rotated. We had, initially, people looking in Taiwan for chipmakers. Then they looked at memory makers, because data centres need the memory to process the data. That went then to Korea,” van der Linde adds.
While the current AI stock rally does share some similarities with the 1990s dot-com bubble, van de Linde, Garg, Qi and Pai say in their The year ahead in 2026 report that there are several differences between the two.
Firstly, most of the spending on AI is coming from large companies and incumbent players, instead of start-ups, who were the ones spending during the dot-com bubble, van der Linde and his colleagues write.
Secondly, data centres are being financed with debt instead of equity, van der Linde and his colleagues note. Most internet start-ups in the late 1990s were financed with equity, they add.
“Our tech team remains positive on memory and foundry across Asia, given the strong order flow for chips. Our counter-argument is that quite often new tech revolutions come in cycles; it is not a straight line up,” van de Linde, Garg, Qi, and Pai write.
“And if there were to be a credit crunch in AI, current high interest rates can be lowered to soften any blow to the market or economy,” they add.
The second story, van der Linde says in his podcast, is the recovery in mainland Chinese equity stocks. “They’ve done pretty good, in particular in the first half of the year, and there’s been incredible buying by mainland Chinese investors, buying stocks actually in Hong Kong,” he adds.
Van der Linde and his colleagues say in their The year ahead in 2026 report that China’s stock rally in 2025 was driven by Chinese households choosing to invest their savings, rather than leaving their money in the bank.
“Chinese households are sitting on a staggering US$23 trillion in cash. They deployed some of that cash into markets – equities, property, and gold. About US$168 billion has come through the Southbound Stock Connect channel this year, and we think there is more to come,” they write.
“A risk to the rally, therefore, lies in anything that shakes that confidence in putting money to work — a policy misstep, a geopolitical flare-up, or a sudden economic wobble,” they add.
Van de Linde, Garg, Qi, and Pai say “earnings need to come through” for Chinese equities if the rally is to persist in 2026. “Valuation multiples for Chinese stocks have already risen. That was the story for 2025. For further upside in Chinese equities, EPS growth is required,” they add.
