Financial plays make ‘genuine improvement’ in Asia equity markets alongside tech, AI counters: JPMorgan
The analysts add, however, that the tech sector outperformed in August and in the month to date for September
JPMorgan's report highlights financials as the most promising area for investment in Asian equity markets. In the past two months, financials have emerged as the sole sector showing genuine improvement, according to the Sep 13 report. While the technology sector dominated earlier in the year, financials took the lead in the second quarter, followed by defensive and cyclical sectors.
Since then, cyclicals and defensives have lost momentum, despite financials continuing to perform well. Investors in markets like North Asia and Singapore are expected to favor financials amid a subdued risk appetite. The financial sector in South Korea is expected to benefit from higher rates, rising payouts, wealth effects, and liquidity from corporate conversions.
The analysts suggest that the shift from tech plays to cyclicals or defensives has been more tactical than long-lasting. They also note that staples, discretionary, healthcare, communication services, and utilities continue to have a muted, mean-reverting profile. The report comes amid calls for a slowdown in AI development due to safety and production concerns, which has led to declines in share prices of global AI-linked stocks like Nvidia and Advanced Micro Devices.
Despite this, the analysts maintain that tech is likely to continue outperforming in 2026, with tech and financials forming two sides of a recommended barbell allocation.
Written by urgent.news from The Business Times - Companies & Markets's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
