HSBC maintains an optimistic but selective stance on Asia, favouring markets with strong growth, innovation and improving shareholder returns. The bank highlights AI and cloud-driven data centre expansion, China’s AI leadership, South Korea’s semiconductor strength and multiple growth drivers in Hong Kong. It also stresses attractive yields in Asian bonds and a barbell strategy combining growth and income.

Innovation-led growth with income support

"We remain optimistic but selective on Asia, focusing on markets with strong economic growth and earnings momentum, driven by a strong capex cycle linked to innovation and manufacturing strength."

"With the rapid adoption of AI and cloud technologies, Asia Pacific is expected to account for 40% of global data centre capacity by 2030, and growth is continuing at speed. Mainland China is at the forefront of AI development, as technology and industrial leaders are benefitting from favourable government policies and improving margins."

"Leading hardware companies in South Korea are faring well amid rising demand for high-performance semiconductors. In Hong Kong, we see multiple growth drivers beyond AI adoption, including a pick-up in consumption, increased IPO activity, strong liquidity inflows and an improving housing market."

"Meanwhile, there are plenty of income opportunities from high-quality dividend stocks, thanks to corporate governance reforms in markets such as South Korea and Japan that are boosting shareholder returns. Asian bonds also offer attractive yields and are less sensitive to interest rate volatility in developed markets."

"Our focus on innovation aligns well with our overweight positions in mainland China, Hong Kong, Singapore and South Korea."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)