Asia / China Equity: Outlook 2026
December 2025 | Jian Shi Cortesi
Can Asia/China continue its strong performance in the face of tariff risks and weak consumer confidence?
Asia ex-Japan equities have surged since the 2022 low, driven by a justified valuation re-rating. China equity has also staged a strong rally in the past two years. We see a compelling case for continued upside, as the current environment, characterised by stabilising domestic conditions and proactive policy measures, presents a supportive backdrop that has historically been a powerful catalyst for Asian markets.
While new tariffs may spur periodic volatility, Asia's economic architecture has evolved fundamentally from earlier cycles. The region has transformed from a passive participant in global trade to an active architect of its own economic destiny. Deeper regional supply chain integration and more self-sufficient production networks have enhanced insulation from external shocks. Across Asia, economic models are progressively reorienting towards consumption and innovation-led growth, creating more resilient internal economies.
In China specifically, despite technological restrictions, companies continue to demonstrate remarkable innovative capacity – capturing global market share and establishing world-leading positions in strategic sectors like EVs, renewables, and artificial intelligence.
In addition, Asian governments are proactively deploying targeted measures to foster stability and growth. We expect consumer sentiment in China to gradually recover on stabilising property prices and the wealth effect from higher equity prices. As these key stores of household wealth find a firmer footing, pent-up demand is likely to be unleashed, particularly given the significant household savings accumulated in recent years.
The convergence of supportive global liquidity conditions, accelerating earnings growth, deepening domestic demand, proactive policy support, and shareholder-friendly reforms creates a durable foundation for continued market advancement.
Domestic policy settings have had a far greater impact for Asian equity performance than external factors like tariffs.
Key takeaway: Domestic policy outweighs external noise
Recent market patterns underscore a crucial reality: domestic policy settings have had a far greater impact for Asian equity performance than external factors like tariffs. While tariffs dominate headlines and generate short-term volatility, they have consistently failed to derail the powerful structural trends emerging within the region. Companies positioned to benefit from Asia's secular consumption growth, technological advancement and green energy transition have demonstrated remarkable capacity to deliver strong performance despite trade tensions. Their growth springs from local demand, supported by proactive industrial policies and benefits from increasingly robust regional supply chains.
Ample opportunities in 2026
We remain steadfast in our disciplined approach – investing with conviction in high-quality businesses that are best positioned to capitalise on Asia's most transformative and durable trends.
- Experience-related consumption: The consumption story in Asia and China is shifting beyond traditional goods, driven by rising demand for services, tourism, and personalised experiences. This trend benefits companies in travel, hospitality, gaming, entertainment and leisure.
- AI, semiconductors and other technology hardware: Asia’s tech hardware and semiconductor industry forms the essential foundation for global AI growth. In China, given the unwavering commitment to technological self-sufficiency, the entire semiconductor and hardware ecosystem presents a strategic investment opportunity. This goes beyond chip fabrication to encompass the entire technology supply chain.
- FinTech and wealth management: The convergence of digital adoption, rising disposable income, and underpenetrated financial services presents a compelling opportunity to invest in digital platforms and wealth managers poised to capture the region’s wealth creation.
- Renewable energy: Asia’s urgent need for energy security and China’s global leadership in renewable energy are driving robust opportunities across the entire renewable energy value chain, from solar power to electric vehicles.
Jian Shi Cortesi is an Investment Director investing in China and Asia Equity strategies at GAM Investments.