FINANCE

Analysis: Why Asia Stocks Have Rallied This Year

Published: Sep. 9, 2025 7:30 p.m. GMT+8

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Asian stock markets have rallied on rising expectations for a U.S. rate cut, a weaker dollar, the AI boom and the region’s resilience to the trade war. Photo: AI generated

Asian stock markets have rallied this year, driven by a weaker U.S. dollar, the artificial intelligence (AI) boom and the region’s resilience to the trade war, with an anticipated U.S. interest rate cut expected to extend the momentum.

The MSCI Asia Pacific Index is up 18% this year through Monday, with the index hitting a record high. The index gauges the performance of large- and mid-cap stocks from five developed economies — Australia, Hong Kong, Japan, New Zealand and Singapore — and eight emerging markets — China, India, Indonesia, South Korea, Malaysia, Taiwan, Thailand and the Philippines.

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Asian stock markets have rallied in 2024, with the MSCI Asia Pacific Index up 18%, CSI 300 up 13%, and Hang Seng up 29%.
Key drivers include a 10% decline in the U.S. Dollar Index, strong AI sector growth, and resilience to the U.S.-China trade war.
Opinions diverge on momentum sustainability; Morgan Stanley predicts a reversal, while Goldman Sachs and others foresee further growth amid likely U.S. rate cuts.

AI generated, for reference only

Who’s Who

JPMorgan Asset Management (Asia) Inc.: JPMorgan Asset Management (Asia) Inc. is represented by Joanna Shen, an investment specialist for Asia-Pacific equity. She notes that Asian economies' resilience to U.S. tariffs, including those with low trade exposure to the U.S. or strong pricing power in their exports, has attracted investor interest. Shen also highlights the de-escalation of China-U.S. trade tensions as a contributing factor.

Pictet Asset Management Ltd.: Pictet Asset Management is an investment firm with operations in Asia. Freeman Tsang, their Head of Intermediaries for Asia ex-Japan, notes that the Asian market is attractive to global investors due to its AI investment opportunities. Andy Wong, Head of Multi-Asset Investment for Asia, highlights the AI prowess of mainland China.

Morgan Stanley: Morgan Stanley published a report on August 20, stating that the rebound in Asian markets since early April has ended and is poised for a reversal. The bank highlighted weak corporate earnings across the region, deteriorating macroeconomic data from China and the U.S., and unfavorable seasonal trends as reasons for this outlook.

Goldman Sachs: Goldman Sachs predicted a 9% earnings growth for constituents of the MSCI AC Asia ex Japan Index this year, followed by 10% in 2026. This optimism is partly based on the high likelihood of a Federal Reserve rate cut in September, which they believe will lead to looser monetary policies across much of the Asia-Pacific region.

Mirae Asset Global Investments (Hong Kong) Ltd.: Phil Lee, head of Asia-Pacific research, maintains a positive outlook on Asian equities, especially Chinese equities, for the second half of the year. This is driven by expectations of a weaker U.S. dollar due to the U.S. fiscal deficit and a higher likelihood of a Federal Reserve rate cut.

AI generated, for reference only