Despite ongoing shifts in financial markets, supply chains, and geopolitics worldwide, Asia equities offer bright prospects amid the weakening US dollar, the region’s technological dominance, China’s AI surge, and India's structural growth.

These factors are reshaping investment opportunities in late 2025 and into 2026, according to Anuj Arora, head of emerging markets and Asia-Pacific equities, and Alexander Treves, Asia head of investment specialists for Asia-Pacific, emerging markets and Asia-Pacific equities, J.P. Morgan Asset Management.

In a compelling discussion at the 2025 Asia Media Summit in Seoul, Arora and Treves outline an optimistic outlook for Asia-Pacific markets. They note that despite geopolitical tensions and the recent tariff headlines, Asia’s economic fundamentals remain robust, with markets – particularly Korea, Taiwan, and India – shrugging off the noise to hit multi-year highs.

A pivotal theme is the US dollar's trajectory. Arora cites the “dollar smile” theory, where the dollar traditionally strengthens as a safe haven during risk-off events. He argues that the traditional “dollar smile” relationship broke around the April 2025 tariffs shock, “when risk assets fell and the dollar did not behave as in prior safe-haven episodes”.

Good for emerging markets

Arora believes the dollar bull market is now challenged, leading to capital staying in Asia rather than flowing back to the United States, which in turn creates “excess liquidity conditions” in emerging markets and enables central banks to ease monetary policy.

The US dollar bull market began in 2011, peaked in 2022 ( DXY ~114 ), and has been in a bear market since 2022. By 2025, it’s in a multi-year downtrend.

As an example, Arora points to Brazil's high real rates ( 15% interest with 5.6% inflation ), which could drop and spark domestic cycles. This dynamic extends to Asia, where high real rates in markets like India and Southeast Asia position them for growth.

Treves echoes this assessment, saying that their clients are now reassessing US exposure: “We've got a lot more conversations about Asian equities currently than we might have done a couple of years ago.”

Heart of AI revolution

Technology has emerged as another cornerstone, with Asia at the heart of the AI revolution. Arora highlights that “65% of all semiconductors are manufactured right here in this region”, underscoring the indispensable role of Korea, Taiwan, Japan, and China in global supply chains.

He cites the case of high-bandwidth memory ( HBM ) chips for graphics processing units ( GPUs ), where Korean firms lead but trade at half the multiples of US peers: “The US manufacturer trades on more than twice the multiple of the Korean manufacturers. And guess what – the Korean manufacturers are the market leaders.”

This valuation discount offers investors “easy access at 50% discount” to the AI boom.

Treves also highlights Asia's evolution from family conglomerates and utilities in the 1990s to dynamic, high-return tech businesses today. He stresses that ongoing corporate governance reforms, inspired by Japan's Abenomics, are enhancing shareholder returns through buybacks and dividends, with Korea's market up 65% since its “value up” initiative.

Investing during deflation

Focusing on China, Arora addresses deflation concerns by reframing the investment approach: “The right question is how to invest in China during deflation?”

He draws parallels to Japan, a top performer despite 15 years of deflation, and advocates for high-yield and growth stocks. As of October 2025, China’s 10-year JGB-equivalent is ~2.15-2.3%, after briefly touching 1.7% in August 2024.

Notably, Chinese corporates have shifted to buying back their shares. Although buybacks existed before ( e.g., 2018-2019 ), 2024-2025 marks the first net positive buyback yield in the CSI 300.

On AI, Arora praises China’s independence: “The whole Chinese AI cycle is completely uncorrelated from the Western one. China is about two years behind the global AI cycle. It's basically starting this year.”

This self-sufficiency, with distinct players, positions China for high-growth plays amid broader challenges like declining foreign direct investment, which has shifted to Asean and India.

India rounds out the narrative as a beacon of stability. Arora calls it “probably the best market in the whole world” for growth, forecasting “more than 5% real GDP growth, 10% nominal GDP growth for the foreseeable future – five to seven years.” This structural story, untouched by much of the market volatility, complements Asia's diversification.

Arora and Treves portray Asia-Pacific as a diversified powerhouse, poised to benefit from dollar weakness, tech leadership, China's AI ascent, and India's steady expansion.

Arora concludes that investors gain “a really diversified asset class, which lets you play lots of different teams at the same time.” With markets resilient and valuations compelling, the next chapter promises rewards for those looking beyond US dominance.