Asian equity markets will grow at an above-average pace

Asian equity markets are expected to outperform the average in 2026. China will step in to support domestic consumption and the property market, while Japan will remain weak.
by Marcel Zimmermann, manager of the Lemanik Asian Opportunity fund
2026 looks set to be a positive year for Asian equity markets, which still offer attractive valuations in many areas and will benefit from the momentum of new technologies and the boost from China. Throughout 2025, the main drivers of the rise in the Asian market were technology and artificial intelligence, and the performance of regional equity markets was dominated by highly tech-concentrated indices such as Korea, Taiwan and, to some extent, Japan. Meanwhile, India and Southeast Asia underperformed. By contrast, healthcare stocks, consumer goods and utilities lagged the index. In particular, the South Korean market recorded a rise far above the other Asian indices in December 2025, with Samsung Corp (+21%) and SK Hynix (+18%) pushing the index close to its November all-time high. The Topix index ended the month slightly lower and Asean markets were flat.
The regional economic backdrop remains mixed, with several national PMI indices below the expansion line. These include South Korea, Taiwan and Japan, while China, Vietnam, India, Thailand and Indonesia remain above the expansion threshold of 50. The central banks of India, the Philippines and Thailand cut their benchmark interest rates to support the economy. Japan, meanwhile, continues to normalise its yield curve with a 25-basis-point increase in the target rate to 0.75%. However, the currency remains weak, clearly challenging the market's general expectations for 2026.
For 2026, we remain confident in Asia's attractive valuations and above-average growth rate. We expect the Chinese government to adopt bolder measures to support consumption and stabilise the property market. Technology could continue to hold up, as artificial intelligence applications are penetrating industrial processes. Quantum computing, which attracted strong interest in 2025, could be another driver over the coming year. A weaker US dollar would clearly provide further support for sentiment towards Asia. The Lemanik Asian Opportunity fund, institutional class, closed 2025 with a positive return of +12.57%, outperforming its benchmark (BBG Asia Pacific Large&Mid Cap Net Return) by 50 basis points, which ended at 12.05%.