Technology has continued to be the most dynamic sector in Asia, as in most other markets, and our view is that this trend has further to run.
The recent earnings and the business outlooks from the region’s key technology companies combined with the aggressive capital expenditure plans of US technology companies drove double-digit percentage gains in the stock markets of Korea and Taiwan in April. Technology was the best‑performing sector in the region last month, as it has been over the last year.1
Technology now makes up over 41% of the MSCI Asia ex-Japan index by weight, and Taiwan is the largest market in the index (28%), overtaking China (26%)2. Samsung Electronics recently became the second Asian company to reach a market value of $1 trillion, following Taiwan Semiconductor.
AI and robots
We have written before about the dynamism of the region’s technology companies. We believe the Asian tech supply chain, including the companies in Taiwan and Korea, are the best way to invest in the growth in artificial intelligence. For these companies, including Taiwan Semiconductor (chip production) and SK Hynix and Samsung Electronics, (memory chips) it doesn’t matter which of the competing large language models that power AI emerge as the winner or winners, or which companies developing agentic AI or physical AI (such as humanoid robots) will win the race. Any winner will likely need the semiconductors, memory and server (and robotic) assembly capabilities of the companies based in Asia.
These supplier companies trade at attractive valuations, well-below those of the big US tech companies, and in some cases, the Asian companies are getting cheaper on a price-to-earnings basis because their earnings are growing faster than their share prices.
These companies also have strong balance sheets and are paying dividends that we believe will grow strongly in the years ahead.
Chip demand
Demand for semiconductors is exceeding supply. We meet regularly with the region’s most important tech companies, and they tell us that they expect business to remain robust next year and the year after. That gives us comfort that peak demand is further in the future.
The conflict in the Middle East adds an element of risk to the market outlook, particularly around energy supplies and inflation. We don’t claim to have any insight into how or when the war with Iran will end. The companies in Asia that we have spoken to are relatively relaxed so far, saying they have adequate supplies of energy and raw materials.
A balance of companies
One of our core beliefs as longtime active investors in the region is the importance of owning a diverse portfolio of stocks. We focus on building an all-season portfolio that can manage through periods of market volatility. This could mean owning a balance of companies exposed to US and global demand, particularly in the technology sector, as well as companies selling products and services to domestic consumers in India, Southeast Asia and Australia, where demand should be resilient even if we do see a period of slower economic growth globally. It could also mean owning energy companies, producers of commodities such as gold and copper miners and owning defense companies.
We think it makes sense to own liquid, large-cap businesses with real cash flows and proven management teams. We look for a combination of growth and value - companies that will grow their earnings and therefore to be able to deliver growing dividend streams, that are reasonably priced, with balance sheet strength and good governance.
Best of both
We think the most attractive countries for investors in the region are Taiwan, Australia, Singapore, South Korea and India. These five countries offer the best of both developed and emerging markets, in our view.
We don’t invest in Chinese companies because we don’t believe China is friendly to investors and because we think the economy has significant structural challenges. We also believe that over time geopolitical tensions between China and the US and other large democracies around the world will escalate.
Our view at the time of writing is that economic momentum is broadly positive around the globe and proving to be resilient so far. We remain cautiously optimistic about the outlook for Asia Pacific (ex China) equities in 2026. Markets are constantly evolving, but right now we believe we could be set for stronger returns in the first half of the year with more risk in the second half, particularly around the US mid-term elections.
Footnotes
1Past performance does not predict future returns.
2JPMorgan note, as at 4.5.2026, citing MSCI, Bloomberg data.
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.
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