Fidelity International has stated that Asia's manufacturing and export sectors are maintaining their resilience, driven by trends in artificial intelligence investment, energy security, and supply chain restructuring. As a new cycle of capital expenditure unfolds, fueled by AI, countries are actively leveraging policy support and industrial upgrades to convert advantages built on past external demand into new momentum. The focus for the coming years will be on whether technological effects can drive investment, consumption, and productivity gains, steering Asia from an export-driven to an investment-driven model to spur the next phase of growth.

Liu Peigan, Fidelity International's Asia economist, noted that Asian nations are nurturing new growth engines such as AI, semiconductors, energy, defense, and advanced manufacturing through fiscal policies, industrial strategies, and various stimulus measures. While the developmental paths are similar across markets, their policy goals and starting points differ. Balancing multiple pressures, including inflation, fiscal deficits, exchange rate volatility, and capital flows, presents a challenge for investment markets. South Korea, for instance, is advancing large-scale AI and semiconductor investment while experiencing typical reflationary cycle characteristics. Tech export growth boosts corporate earnings, fiscal revenue, and investment activity, yet inflationary pressures limit the room for monetary policy easing. Taiwan-China is directing domestic savings into strategic sectors, but if income growth and fiscal support gradually translate into consumption demand, it may face a situation similar to South Korea's, where policy could see fiscal stimulus combined with monetary tightening. Meanwhile, Japan aims to attract private capital into key industries, using investment-led strategies and long-term nominal GDP growth to enhance its potential growth rate. However, fiscal expansion must balance improving productivity with maintaining market confidence to avoid pushing up bond yields or forcing the Bank of Japan into stronger policy actions.

Liu stressed that Taiwan-China, South Korea, and Japan are converging on a mix of fiscal support and tighter monetary policy, striving to promote investment growth while ensuring financial market stability. Despite policy divergence across markets, the global monetary environment remains a critical variable for the Asian economy. Elevated US Treasury yields could restrict Asian central banks' ability to further ease policy and pressure regional currencies. Conversely, if the Federal Reserve tightens excessively, it could undermine support for North Asian exports and tech cycle momentum. Liu believes the key to watch is whether technological innovation can translate into sustained local investment and demand, and whether central banks can effectively manage the resulting inflation and financial market pressures. Should this transmission mechanism be established successfully, Asia would have the opportunity to transition from an export-led growth model to a new cycle driven by investment and supported by domestic demand.

Asia is at the core of several trends shaping global markets, including AI, semiconductor demand, electrification, and energy resilience. South Korea, Japan, mainland China, and Taiwan-China simultaneously possess the three conditions of long-term structural growth trends, improving fundamentals, and reasonable valuations, making their investment appeal stronger than that of other major global markets. Fidelity International fund manager Ian Samson pointed out that AI has evolved from a pure tech theme into a major force driving global capital expenditure, encompassing an entire ecosystem that includes computing power, advanced chips, memory, network equipment, data centers, and power infrastructure. North Asia holds the most critical supply chain advantages in this regard. Additionally, Asia is a key driver in expanding global energy infrastructure, from electrification trends boosting demand for grid equipment, battery storage, transmission and distribution networks, and power management systems, to the rapid growth of data centers further elevating the need for stable power and related infrastructure, offering investors a broader opportunity set.

Regarding market positioning, Taiwan-China boasts the world's most competitive semiconductor and AI hardware ecosystem, offering long-term growth momentum while presenting more attractive valuations than similar Western market investment options. South Korea, with its global competitiveness in memory, semiconductors, and batteries, is poised to benefit from AI demand growth and energy transition trends. Japan holds a critical position in semiconductor equipment and advanced manufacturing, with deep strengths in power equipment, electronic components, and infrastructure-related industries, pointing to promising long-term potential. Furthermore, with inflation recovering, policy support, and interest rate normalization, bank stocks could benefit from widening interest margins, while mid-cap stocks offer a blend of earnings growth momentum and reasonable valuations. Mainland China is benefiting from new growth drivers brought by its economic transformation. Even as the broader economy faces challenges like property adjustment and weak demand, policy continues to support strategic sectors such as advanced manufacturing, optical communications, AI hardware, and energy storage. The ChiNext Index and STAR50 Index provide channels for participating in the new economy's growth. Ian believes that while tech sectors like semiconductors have cyclical characteristics and market valuations depend on sustained corporate earnings resilience, Asian companies could continue to benefit from demand growth for related components, equipment, and physical infrastructure if AI infrastructure investment continues to expand over the next decade. At the same time, markets across the region have actively pursued investor-friendly reforms in recent years, further enhancing Asia's long-term appeal.

As for fixed income investments, Ian noted that with the market's ongoing focus on widening US fiscal deficits and inflation risks in developed markets, Asian assets' function as a store of value deserves renewed attention from investors. Mainland China, benefiting from a relatively mild inflation environment and a substantial trade surplus, sees its government bonds and the renminbi display favorable defensive characteristics. Japan, Taiwan-China, and South Korea also boast solid trade surpluses and relatively undervalued currencies. For investors seeking to reduce dollar concentration risk and enhance portfolio diversification, Asia's fixed income markets could offer long-term allocation opportunities backed by solid fundamentals.