Standard Chartered Bullish on Asia ex-Japan Equities Amid AI Boom

Standard Chartered has upgraded its outlook for Asia ex-Japan equities to "overweight," forecasting significant growth driven by the artificial intelligence revolution. The bank anticipates that this region will lead global markets in earnings growth through 2026 and 2027.

AI and Semiconductors to Drive Earnings Growth

Standard Chartered’s optimistic stance is primarily anchored in the sustained investment cycle surrounding artificial intelligence. The bank expects the region to deliver the strongest earnings growth among all major global markets during the 2026–2027 period. This growth trajectory is expected to be fueled by massive AI-related capital expenditure and the continued dominance of the semiconductor sector.

As companies globally race to build out AI infrastructure, the hardware and chip-making capabilities concentrated in Asia are positioned to become the primary beneficiaries of this technological shift.

Regional Leaders: Taiwan, China, and India

While the outlook for Asia ex-Japan is positive as a whole, the bank has identified specific regional winners based on different economic drivers:

  • Taiwan: Favoured due to its unmatched dominance in advanced semiconductor manufacturing, making it a central pillar of the AI hardware supply chain.
  • China: Viewed as an attractive option due to compelling valuations and a rapidly expanding innovation ecosystem.
  • India: Highlighted for its sustained resilience and robust, domestically driven economic growth, providing a stable pillar for investors.

Mitigating Geopolitical and Energy Risks

A key component of Standard Chartered's bullishness is the projected easing of energy-related tensions. The bank’s base-case scenario suggests that shipping through the Strait of Hormuz could resume within weeks. This development would alleviate significant concerns regarding oil supply disruptions in the Middle East. For Asia, which remains heavily reliant on energy imports, a stabilization of oil supplies would provide much-needed macroeconomic relief and lower inflationary pressures.

Global Asset Projections: S&P 500 and Gold

Beyond Asia, Standard Chartered maintains an "overweight" stance on global equities, with a preference for both the U.S. and Asia ex-Japan markets. The bank’s long-term quantitative projections reflect a high degree of confidence in risk assets and safe-haven hedges:

  • S&P 500: The index is projected to climb to the 7,950 level.
  • Gold: Prices are expected to surge to $5,100 per ounce by mid-2027.
  • Bonds: The bank continues to favour emerging-market U.S. dollar-denominated bonds.

This diversified strategy suggests a constructive long-term outlook where technological advancement and macroeconomic stabilization converge to reward equity investors.

Key Takeaways

  • Growth Catalyst: AI-driven investment and semiconductor strength are expected to make Asia ex-Japan the global leader in earnings growth by 2026–2027.
  • Strategic Picks: Taiwan (chips), China (valuations), and India (domestic growth) are the primary regional markets of interest.
  • Bullish Targets: Standard Chartered forecasts a massive rise in gold to $5,100 and the S&P 500 reaching 7,950 by mid-2027.