Asia Equity Insights Quarterly: Asia‘s AI trade tested

Research evidence excerpt

Asia Equity Insights Quarterly: Asia‘s AI trade tested

16 July 2026

Asia Equity Insights Quarterly EquityAsia Strategy

Asia’s AI trade tested

◆ Korea is still Asia’s strongest growth story, but leverage and HSBC WEIGHTINGS AND TARGETS

concentrated positions will likely keep volatility elevated Market Weighting Index End-2026e target

Mainland China OW FTSE China 29,000

◆ In mainland China, we find value in banks, property, Internet, Hong Kong OW FTSE Hong 1,050

Kong

as well as growth in pharma and energy storage Hang Seng 27,000

HSCEI 9,100

◆ Upgrade India to neutral as risks to earnings fall; downgrade Singapore OW STI 6,100

India N (from UW) Sensex 84,000

Malaysia, the Philippines to underweight; update index targets Japan N TOPIX 4,350

Korea N KOSPI 8,000

Taiwan N TAIEX 49,000

Korea continues to dominate. As long as US data centre spending remains robust, Indonesia UW JAK COMP 6,200

Malaysia UW (from N) KLCI 1,750Korea’s earnings should stay supported, further helped by valuations that still look low

Philippines UW (from N) PSEI 6,500

versus history and peers. However, there are some local risks: while retail participation Thailand UW SET 1,700

has intensified, a lot of it is often via newly issued leveraged single-stock ETFs and Vietnam VN30 2,070

margin lending (USD23bn). Meanwhile, despite all the heavy selling, foreign Note:Source:OWHSBC– overweight,estimatesN – neutral, UW – underweight

investors’ exposure to memory-heavy Korea is rising. Such crowded positioning will

likely keep market volatility elevated, reinforcing the case for diversification.

Herald van der Linde*, CFA

Opportunities in mainland China. Oversupply and weak demand still constrain Head of Equity Strategy, Asia Pacific The Hongkong and Shanghai Banking Corporation Limited