AI and liquidity to drive Asia markets in 2026 amid US fiscal risks: Schroders
The technology sector remains the cornerstone of Schroders’ bullish thesis for the region
[SINGAPORE] In 2025, US fiscal and geopolitical headwinds prompted investors to redeploy capital towards the East.
Petr Kocourek, fund manager for Asia Multi-Asset at Schroders, noted that the initial shift into Asia during 2025 was partly a reaction to risks associated with the US administration and a weaker US dollar.
“Separately, key Asian markets like mainland China, South Korea, and Japan have benefited from corporate reform campaigns, fuelling domestic demand and investor confidence,” he added.
According to Schroders’ Year Ahead 2026: Asia Multi-Asset outlook released on Dec 16, the region is entering a potentially favourable cycle.
Schroders believes Asia is now poised to capitalise on two fresh catalysts in 2026: a deepening artificial intelligence (AI) boom and a significantly improved liquidity environment.
AI driver
The technology sector remains the cornerstone of Schroders’ bullish thesis for the region. While the AI narrative has lifted markets globally, Kocourek pointed out that Asia is now outpacing the West in critical areas.
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“AI capex in Asia has outpaced the US and Europe in recent years, a trend likely to continue into 2026 due to favourable demographics and greater technological adoption,” he noted.
Both “AI enablers” and “AI adopters” are diverse across the Asia region, contributing to broad market strength, the fund manager said.
Valuations also present a compelling case for Asian equities. Schroders observes a significant price-to-earnings ratio gap that currently favours Asia ex-Japan technology stocks over their US counterparts, offering investors a more attractive entry point into the structural growth story.
Data from PwC also stated that global semiconductor demand will grow at an annual compounded rate of 8.8 per cent from 2024 to 2030, a tailwind that directly benefits Asia’s hardware-heavy indices.
However, Kocourek cautioned that investors should remain mindful of risks, specifically citing “concerns over sector concentration and capital expenditure that is increasingly debt-funded”, which could raise questions regarding earnings sustainability in the long run.
Liquidity gates opening
Beyond technology, the macroeconomic backdrop for 2026 appears increasingly supportive of Asian assets.
The US Federal Reserve has signalled an end to quantitative tightening by December, a move expected to inject liquidity into global markets.
Schroders anticipates this will give Asian central banks the breathing room to lower their own interest rates.
“This environment should support sentiment for Asian equities and fixed income, especially interest rate-sensitive sectors,” Kocourek said.
Gold and US equities
Amid the geopolitical friction associated with the US administration, gold remains a critical portfolio diversifier, Schroders said.
Kocourek notes that demand for the precious metal is being structurally supported not just by central banks, but also by Chinese retail investors seeking safety.
Schroders maintained a positive view on US equities, despite the fiscal risks that are driving diversification into Asia. The firm sees potential for “upside surprises” in US markets following a reset in earnings per share expectations.
“The likely backdrop of a dovish monetary environment and AI enthusiasm also supports attractive growth expectations in US equities,” Kocourek added.
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