Stock markets around the world have had a strong run over the last three years1 so it is a prudent time to think about what may lie ahead in the coming months.
We remain confident of earnings and dividend growth in the Asia ex-Japan companies that we invest in, yet we wouldn’t expect market returns over the next six to nine months to be as strong as they have been over the previous six to nine months.
Markets may rise but perhaps not in a straight line, and we may be approaching the late part of this global economic growth cycle. We have slightly reduced the risk profile in our Asia ex-Japan equity income strategy.
Higher bond yields, which we have seen this year, tend to put pressure on equity prices. Elevated energy prices, with oil rising above $100 a barrel this month, are pushing up inflation. The conflicts in the Middle East and Ukraine, which are disrupting energy supplies and pricing, don’t appear to be close to resolution. Higher inflation and relatively healthy levels of economic growth are pressuring central banks to raise interest rates, and this could restrain equity markets.
US, French elections
There is risk around the US midterm elections in November, including whether the US Treasury may become more active in markets. We think the French election in April also bears monitoring because both government debt and corporate debt levels are high there. Any significant changes to government policy in France could add volatility in the euro and currency markets generally.
The potential for weather-related disruption from the El Niño event has been well flagged. This could include additional extreme weather events, higher food prices and at worst, social unrest.
We’ve talked about risks, but a resolution in the Middle East conflict could extend the current economic growth cycle by bringing down energy prices and easing inflation and pressure on central bankers to raise rates.
All-weather strategy
We have invested in recessions and extended periods of volatility. Market corrections are possible and are a normal part of market cycles. For this reason, we seek to run an “all-weather’’ strategy, meaning that we want our portfolios to be resilient through a range of economic scenarios. Diversification across companies, markets, sectors and countries is important.
We look to invest in businesses with strong balance sheets – nine of our 25 companies are in a net cash position. If there is a downturn, we would expect these companies to be better placed than businesses with burdensome levels of debt. The rest of our holdings have low levels of leverage relative to their business models.
We have a mixture of companies exposed to US and global demand, and companies selling products to domestic consumers in India, Southeast Asia and Australia, where demand should stay resilient if global economic growth slows.
Technology and financials
Technology remains the largest sector in our Asia ex-Japan income strategy. We expect earnings growth for the tech companies that we own to be strong through 2027, into the beginning of 2028 and possibly beyond.
Technology is a cyclical sector, however, and eventually there will be a downturn. We see good opportunities for the Asia tech companies we invest in on a five-year view, and we think that the next uplift for the tech sector will come partly from demand for humanoid robots.
Financials are the second-largest sector in our strategy, and we've been happy with the performance of the select stocks that we own. They are benefiting from a healthy demand for loans and low levels of credit risk.
Five countries
We are invested in just five countries (Taiwan, Australia, Singapore, India and South Korea). We think these five provide the best of both developed and emerging market opportunities.
It might surprise some people that equity markets in Australia and Taiwan have outperformed those in the US this century (2000 to 20262) and that Singapore’s GDP per capita is higher than that of the US.3
US and Asia long term
The price to earnings multiple for Asia Pacific ex Japan equities is at a similar level to its average over the past 20 years. While not extremely cheap, the market is absolutely within a range that we're comfortable with.
In our view, the US and Asia are the best markets for investors over the long term. We’ve talked about risk because we think it’s prudent to do so, but we remain cautiously optimistic about the outlook for Asia Pacific (ex Japan) equities for the remainder of this year and going into 2027.
Footnotes
1 FTSE All World Index of global large-cap and mid-cap equities gained 77% in the three years through August 2026. Source FTSE All World factsheet. 31.8.2026. Past performance does not predict future returns.
2Australia equity market returned 1201% from 4.1.00 to 14.8.26 vs Taiwan +1057% vs US +805%, in USD. Source: Bloomberg as at 14.8.26. Past performance does not predict future returns.
3Source: Bloomberg as at 14.8.26. Singapore $71,000 vs US $67,000, in USD.
Strategy risks
- Currency (FX) Risk - The strategy can be exposed to different currencies and movements in foreign exchange rates can cause the value of investments to fall as well as rise.
- Pricing risk - Price movements in financial assets mean the value of assets can fall as well as rise, with this risk typically amplified in more volatile market conditions.
- Market Concentration Risk (Geographical Region/Country) - Investing in a particular country or geographic region can cause the value of this investment to rise or fall more relative to investments whose focus is spread more globally in nature.
- Market Concentration Risk (Single Name) - The strategy holds a relatively small number of stocks and may therefore be more exposed to underperformance of a particular company or group of companies compared to a portfolio that invests in a greater number of stocks.
- Derivative risk - the Strategy may use derivatives to reduce costs and/or the overall risk of the Strategy (this is also known as Efficient Portfolio Management or "EPM"). Derivatives involve a level of risk, however, for EPM they should not increase the overall riskiness of the Strategy.
- Emerging Markets Risk - Emerging markets are potentially associated with higher levels of political risk and lower levels of legal protection relative to developed markets. These attributes may negatively impact asset prices.
- Liquidity Risk (general) - During difficult market conditions there may not be enough investors to buy and sell certain investments. This may have an impact on the value of the strategy.
- Charges from capital - Some or all of the strategy’s charges are taken from capital. Should there not be sufficient capital growth in the Fund this may cause capital erosion.
- Stock Connect Risk - Stock Connect is governed by regulations which are subject to change. Trading limitations and restrictions on foreign ownership may constrain the strategy's ability to pursue its investment strategy.
- Default Risk - The risk of losses due to the default of a counterparty on a derivatives contract or a custodian that is safeguarding the strategy's assets.
- Default Risk - The strategy may invest a significant portion of its assets in distressed securities which have a higher risk of losses due to the increased likelihood of an issuer of securities defaulting on its obligations. While they may retain some potential value in the event of default, the recovery process may be lengthy and there may be no secondary market to exit causing a deterioration in liquidity.
The value of active minds: independent thinking
A key feature of Jupiter’s investment approach is that we eschew the adoption of a house view, instead preferring to allow our specialist fund managers to formulate their own opinions on their asset class. As a result, it should be noted that any views expressed – including on matters relating to environmental, social and governance considerations – are those of the author(s), and may differ from views held by other Jupiter investment professionals.
Important information
Marketing Communication.
This document is intended for investment professionals and is not for the use or benefit of other persons, including retail investors. It is information only and is not investment advice. Holding examples are for illustrative purposes only and are not a recommendation to buy or sell. The views expressed are those of the authors at the time of preparation, are not necessarily those of Jupiter as a whole and may be subject to change. Past performance does not predict future returns. The value of investments and income may go down as well as up and investors may not get back amounts originally invested. Exchange rate changes may cause the value of investments to fall as well as rise. Every effort is made to ensure the accuracy of any information provided but no assurances or warranties are given. This document may include ESG-related content which reflects Jupiter’s current policies and frameworks and may evolve over time. No part of this document may be reproduced in any manner without the prior permission of Jupiter.
Argentina
This document and the information contained herein does not constitute and is not intended to constitute an offer of securities and accordingly should not be construed as such. The fund and any other products or services referenced in this document may not be licensed, authorized to distribution in all jurisdictions, and unless otherwise indicated, no regulator or government authority has reviewed this document or the merits of the products and services referenced herein. This document and the information contained herein has been made available at your exclusive own initiative in accordance with the restrictions and/or limitations implemented by any applicable laws and regulations. This document is provided on a confidential basis for informational purposes only and may not be reproduced in any form. Before acting on any information in this document, prospective investors should inform themselves of and observe all applicable laws, rules and regulations of any relevant jurisdictions and obtain independent advice if required. This document has been sent at the specific request of and is for the use of the named addressee only and should not be given, forwarded or shown to any other person (other than employees, agents or consultants in connection with the addressee’s consideration thereof). The fund is not under the public offer regime.
Brazil
The shares in the fund may not be offered or sold to the public in Brazil. Accordingly, the shares in the fund have not been nor will be registered with the Brazilian Securities Commission - CVM nor have they been submitted to the foregoing agency for approval. Documents relating to the shares in the fund, as well as the information contained therein, may not be supplied to the public in Brazil, as the offering of shares in the fund is not a public offering of securities in Brazil, nor used in connection with any offer for subscription or sale of securities to the public in Brazil.
Chile
Neither the issuer nor the shares have been registered with the comisión para el mercado financiero pursuant to law no. 18.045, the ley de mercado de valores and regulations thereunder. This document does not constitute an offer of, or an invitation to subscribe for or purchase, the shares in the republic of chile, other than to the specific person who individually requested this information on his own initiative. This may therefore be treated as a “private offering” within the meaning of article 4 of the ley de mercado de valores (an offer that is not addressed to the public at large or to a certain sector or specific group of the public.
Colombia
This document does not constitute a public offer in the Republic of Colombia. The offer of the fund is addressed to less than one hundred specifically identified investors. The fund may not be promoted or marketed in Colombia or to Colombian residents, unless such promotion and marketing is made in compliance with Decree 2555 of 2010 and other applicable rules and regulations related to the promotion of foreign funds in Colombia.
The distribution of this document and the offering of Shares may be restricted in certain jurisdictions. The information contained in this document is for general guidance only, and it is the responsibility of any person or persons in possession of this document and wishing to make application for Shares to inform themselves of, and to observe, all applicable laws and regulations of any relevant jurisdiction. Prospective applicants for Shares should inform themselves of any applicable legal requirements, exchange control regulations and applicable taxes in the countries of their respective citizenship, residence or domicile.
Costa Rica
This is an individual and private offer which is made in Costa Rica upon reliance on an exemption from registration before the General Superintendency of Securities (“SUGEVAL”), pursuant to article 6 of the Regulations on the Public Offering of Securities (“Reglamento sobre Oferta Pública de Valores”). This information is confidential, and is not to be reproduced or distributed to third parties as this is NOT a public offering of securities in Costa Rica. As this is NOT a public offering of securities under the definition set forth in the Securities Market Statute (“Ley Reguladora del Mercado de Valores”), the product being offered is not intended for the Costa Rican public or market and neither is registered or will be registered before the SUGEVAL and, accordingly, it is not covered by the supervision, disciplinary regime and protections afforded to local investors by the Securities Market Statute with regards to the public offerings of securities, and it is not registered in the National Registry of Securities and Intermediaries (“Registro Nacional de Valores e Intermediarios”). As this is a private offering of securities, the investor will not have access to ongoing reporting required by the regulations set forth by the National Council for Supervision of the Financial System (“CONASSIF”) and the SUGEVAL. As this is NOT a public offering of securities registered in the National Registry of Securities and Intermediaries, the investor will not be able to trade the product in the secondary market.
Mexico
The securities have not been and will not be registered with the National Registry of Securities, maintained by the Mexican National Banking and Securities Commission and, as a result, may not be offered or sold publicly in Mexico. The fund and any underwriter or purchaser may offer and sell the securities in Mexico on a private placement basis to Institutional and Accredited Investors pursuant to Article 8 of the Mexican Securities Market Law.
Paraguay
The Fund has not been registered with the Comisión Nacional de Valores of Paraguay (CNV), neither with the Stock Exchange of Asuncion (BVPASA) and is being placed by means of a private offer. CNV nor BVPASA has not reviewed the information provided to the investor. This document is only for the exclusive use of specific investors in Paraguay and is not for public distribution.
Peru
IMPORTANT NOTICE: The Superintendencia del Mercado de Valores (SMV) does not exercise any supervision over this Fund and therefore the management of it. The information the Fund provides to its investors and the other services it provides to them are the sole responsibility of the Administrator. This document is only for the exclusive use of institutional investors in Peru and is not for public distribution.
Uruguay
The sale of the shares qualifies as a private placement pursuant to section 2 of Uruguayan law 18,627. The shares must not be offered or sold to the public in Uruguay, except in circumstances which do not constitute a public offering or distribution under Uruguayan laws and regulations. The shares are not and will not be registered with the Financial Services Superintendency of the Central Bank of Uruguay. The shares correspond to investment funds that are not investment funds regulated by Uruguayan law 16,774 dated September 27, 1996, as amended.