Asia’s growth: Navigating regional opportunities amid global disruption
Despite the uncertainty, the region’s fundamentals remain stronger than most
AS INVESTORS look towards 2026, Asia stands out as the world’s most resilient growth engine. The region continues to expand faster than any other, supported by steady domestic demand, credible policy frameworks and accelerating technological transformation.
Yet, the global backdrop remains uncertain. Tariffs and strategic trade restrictions between the US and China continue to shape industrial competition, prompting companies and investors to rethink global supply chains and capital allocation strategies.
“Asia remains a key region for investors,” said Steve Brice, global chief investment officer at Standard Chartered. “From an economic perspective, the region is a key part of the global economy. The IMF (International Monetary Fund) estimates the region will grow a full 2 per cent faster than global growth this year.”
Brice added that within Asia, the bank remains overweight China, while India continues to be a core holding, thanks to its long-term structural growth story.
“We increased our allocation to Asia ex-Japan equities earlier in the year against the backdrop of looser monetary policy settings, a weaker US dollar and the significant valuation discount to US equities,” he said. “We expect the recent outperformance of Asia ex-Japan equities to continue into year-end and 2026.”
George Efstathopoulos, multi-asset portfolio manager at Fidelity International, observed that investor sentiment toward Asia is improving.
“For much of the past three years, investors called China ‘uninvestable’. That is changing,” he said. “Pushback is fading, fundamentals are improving and earnings are coming through. We’re seeing investors move from avoidance to selective re-engagement.”
Asia’s resilience
Rajat Bhattacharya, senior investment strategist at Standard Chartered, credits a decade of reform and greater self-reliance.
Asian economies have strengthened fiscal positions and central-bank reserves, while trading more with one another and relying less on Western demand. That integration, coupled with a weaker dollar that has allowed central banks to ease policy, has made the region less vulnerable to external shocks.
His view echoes the IMF’s analysis showing that nearly two-thirds of global growth still comes from Asia. Many governments used the calm years before the Covid-19 pandemic to rebuild buffers, giving them room to act when inflation or capital-flow pressures hit.
The Asian Development Bank (ADB) adds another structural layer. The region’s middle class has expanded rapidly, creating deeper domestic markets and reducing dependence on exports to the West. This internal demand has become a stabilising force as global trade slows under the weight of tariffs and protectionism.
From export engine to self-sustaining growth
Asia’s policy focus is shifting decisively towards domestic engines of growth. Governments are investing heavily in advanced industries and technology to move up the global value chain.
China is pushing for leadership in quantum computing, artificial intelligence (AI), semiconductors and green technologies under its forthcoming 15th Five-Year Plan for 2026 to 2030.
India, responding to higher US tariffs and sanctions this year, has stepped up measures to boost local manufacturing and consumer spending.
Supply-chain realignment and the “China+1” effect
The re-engineering of global supply chains continues to reshape the region. Companies are adopting a “China+1” strategy: retaining production in China while adding capacity in nearby markets to reduce geopolitical risk.
Standard Chartered’s Future of Trade 2025 report highlights India, Malaysia and Vietnam among the top destinations for this diversification.
India, in particular, has emerged as the leading choice among corporates surveyed, with more than 40 percent planning to increase trade and manufacturing activities with one of the world’s fastest-growing large economies and its most populous market.
This shift is also reflected in trade data. The IMF reports that intra-Asian trade has been growing faster than world trade since 2020, showing how regional integration is deepening even as global fragmentation rises.
For investors, the trend supports demand in industrial real estate, logistics infrastructure and local-currency debt across emerging Asia.
High-conviction growth themes
Even as global volatility persists, several long-term structural forces continue to define Asia’s investment landscape. From digital innovation to the rise of domestic consumption and the acceleration of the low-carbon transition, these shifts are driving a new phase of growth.
For investors, they offer durable, multi-year opportunities rather than short-term market trades.
“Within Asia, we are overweight China,” said Brice. “China’s Fourth Plenum reinforced plans to bolster service consumption and support corporate earnings, with the next focus being the Central Economic Work Conference meeting in December. We prefer offshore equities, given their greater tilt towards our preferred growth sectors.
“We see India as a core holding; its long-term growth prospects remain strong despite tariff concerns and earnings downgrades. We favour large-cap equities over mid-caps and small-caps for their stronger earnings visibility and valuation margin of safety.”
Digitalisation and technology
Brice also noted that digitalisation is “the most investible theme at the moment”.
“This area is experiencing rapid growth, concurrent with rising AI investments. As more information is captured digitally, it can be analysed with AI more efficiently, driving greater efficiency and potential automation,” he said.
“Naturally, this is a very broad space, but has positive tailwinds for cloud demand and software, as well as hardware like semiconductors, computing devices and data-centre build-outs.”
Across Asia, governments are racing to secure technological leadership. China is advancing its chip-manufacturing ecosystem, India is exporting its digital-public-infrastructure model, and Singapore is investing in AI and quantum research.
The IMF estimates that digital adoption could lift Asia’s productivity by roughly one percentage point annually through 2030.
Consumer and wealth growth
The ADB projects that, by 2030, nearly two-thirds of the world’s middle-income population will live in Asia. This expanding consumer base is reshaping industries from retail and healthcare to leisure and financial services.
Even in slower-growing economies, rising urbanisation and disposable income continue to drive steady domestic demand.
Bhattacharya noted that Asia’s consumption story remains intact despite external headwinds.
“The outlook for domestic consumption remains resilient due to a few salient factors: strong government spending, especially in China and India, which have also implemented meaningful personal and consumption tax cuts this year; a significant disinflationary trend that is lifting real wages; and central-bank rate cuts that have lowered borrowing costs and supported household confidence,” he said.
Transition investing
Another key theme is transition investing, which focuses on supporting the shift to a low-carbon economy. It goes beyond traditional climate solutions like renewables to include high-carbon sectors such as steel and cement, where companies have credible plans to align with net-zero goals, as well as those enabling this change, from scrap-steel producers to low-carbon material innovators.
Standard Chartered’s Sustainable Banking Report 2025, titled “Transition Investing: The Next Wealth Frontier?”, reveals strong investor appetite for this opportunity.
Among 1,600 high-net-worth investors surveyed across eight markets – Hong Kong, India, Mainland China, Malaysia, Singapore, South Korea, Taiwan and the United Arab Emirates – 87 per cent expressed interest in transition investing, higher than the 83 per cent who showed interest in sustainable investing overall.
Risks on the horizon
The outlook is constructive, but not without caveats. The US-China rivalry is likely to intensify, with tariffs and export restrictions already weighing on manufacturing supply chains. The IMF warns that prolonged trade fragmentation could trim Asia’s annual growth by about 0.3 percentage point if cross-border investment weakens.
Efstathopoulos noted that Asia has so far benefited from low inflation and policy easing, unlike many developed markets. “If inflation rises unexpectedly or fiscal credibility comes into question – especially in smaller emerging markets – central banks may be forced to tighten again, which could slow lending and dampen consumption,” he said.
Currencies and inflation are also key watch points.
A rebound in the dollar or a commodity-price spike could pressure emerging-market exchange rates. Smaller economies with higher external debt remain sensitive to shifts in global liquidity. Climate risks are another concern, as uneven policy transitions could create stranded assets in carbon-heavy sectors.
The path ahead
Despite the uncertainty, Asia’s fundamentals remain stronger than most. The IMF expects monetary easing across the region to continue in 2026, and Standard Chartered anticipates further outperformance of Asia ex-Japan equities as valuations catch up with earnings.
The bank also sees opportunities in Asian bonds, where real yields remain attractive and inflation is largely under control.
“For global investors, being under-invested is riskier than being well-invested,” Brice concluded. “Asia’s structural reforms, demographics and innovation create opportunities that investors can no longer afford to ignore.”
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