Asia is a broad and diverse investment universe, and there are a number of investment opportunities as we look ahead to 2026.
In China
Consumer-related stocks look interesting. For much of the past few years, weak demand, a troubled property sector, and deflationary fears have pushed down sentiment. Yet, with fresh fiscal and monetary policy support, there could be a meaningful reset for domestic demand, particularly in consumer goods and discretionary services. Valuations today reflect caution, meaning that selective Chinese consumer names may offer an attractive opportunity for investors willing to look past near-term macro headwinds. Artificial intelligence (AI) adoption in China is another area we are paying attention to. With the rise of DeepSeek, a Chinese AI model now widely accessible to firms, many companies in China are gaining easier access to advanced AI tools that rival leading Western offerings, often at a fraction of the deployment cost. As AI becomes embedded, firms that adopt early stand to benefit from improved efficiency and lower operating costs. Companies with significant tech know-how and the ability to implement AI into their business model, such as Tencent, can cement their position as market leaders.
Precious metals
Particularly gold, remain of interest despite reaching all-time highs. Gold may reclaim its traditional role as a store of value amid broader volatility in global markets and currency pressures. Buying by Central Banks, particularly in emerging markets, suggests ongoing demand. Stocks like Zijin Gold International (HKSE: 2259) are ways we have been looking to get gold exposure.
In India
The dust from recent equity-market froth seems to have settled. After a period of lofty valuations and stretched expectations, the market now appears more grounded. Corporate earnings have undergone a reality check, and valuations, especially in large caps, seem more reasonable than a few quarters ago. Coupled with resilient domestic demand, structural reforms, tax cuts and a youthful demographic, India’s equity market offers a structural opportunity with relatively more compelling valuations versus last year, and we have been incremental buyers.
AI adoption
We see AI adoption as an opportunity, but remain more wary of AI enablers. Asia’s AI-linked semiconductor stocks have been among the strongest performers in recent years, driven by enthusiasm for artificial intelligence, high-performance computing, and rapid data centre expansion. But despite the strong long-term potential of the industry, we are approaching it with a degree of caution after the strong tech rally.
A key concern is that the huge wave of AI-related capital expenditure by global technology companies has not yet translated into equally strong, broad-based revenue growth across the semiconductor supply chain. While some leading-edge chipmakers are seeing robust demand, many other segments face the risk of over-ordering and inventory build-ups if expectations prove too optimistic. That could lead to periods of volatility as the market adjusts to more realistic growth rates.
Semiconductors
Semiconductors also remain a highly cyclical industry, historically prone to sharp swings in demand once supply catches up. Add to this the external pressures of policy uncertainty, export restrictions and geopolitical tensions, and it becomes clear that valuations for some AI-themed stocks may be pricing in a very smooth path, which might not be so smooth.
However, caution should not be confused with pessimism. The semiconductor industry is structurally critical to global technology progress. AI, cloud computing, electric vehicles and automation all depend heavily on Asian chipmakers, who play essential roles in advanced manufacturing, memory, design, and testing. Over the long term, these companies are well-positioned to benefit from sustained digital transformation.
Stock spotlight
We remain selective and valuation-aware, focusing on high-quality businesses with durable competitive advantages rather than chasing momentum.
Fuyao Glass (HKSE: 3606) is one of the world’s largest manufacturers of automotive glass, supplying major global carmakers such as Toyota, GM, Ford, Tesla, and Volkswagen. Founded in China in 1987, the company has grown into a global powerhouse with production facilities across Asia, the US, and Europe. As cars have become more advanced, the glass they use has also become more sophisticated, creating a strong long-term growth opportunity for Fuyao.
Traditionally, auto glass was a relatively simple, low-margin component. Today, it is increasingly a technology-rich product, incorporating sensors, antennas, heads-up displays, heating elements, and even acoustic-reducing layers. This transformation results in higher selling prices and improved margins. Fuyao has invested heavily in R&D and automation to capitalise on this shift, thereby helping it maintain strong market share and pricing power.
The company also benefits from the global recovery in car production, especially as electric vehicles (EVs) gain traction. EVs typically require larger and more complex glass surfaces, including panoramic windshields and roofs, which further expand Fuyao’s addressable market. Its deep relationships with top global OEMs position it well as EV penetration increases worldwide.
Fuyao’s financial profile is solid: it has a healthy balance sheet, consistent cash flow generation, and a track record of stable dividend payments. Its overseas factories support global diversification and reduce reliance on domestic demand. It has also created a manufacturing footprint in the U.S., which means it is able to mitigate potential tariff-related issues between the U.S. and China.
However, we remain mindful of risks such as fluctuations in global auto production, ongoing competition and rising raw material costs. Still, Fuyao’s scale, technological expertise, and strong customer relationships give it a durable competitive edge. For long-term investors, we think Fuyao Glass offers a compelling way to participate in the modernisation of the global auto industry.
