Markets in motion: How Asia is staying on course

Global headlines in recent months have been dominated by fresh trade tensions, sweeping tariff announcements, and conflict in the Middle East. Historically, events of this scale would have triggered a sharp sell-off in stock markets – especially in export-heavy Asia. But the reaction this time has been very different.

Rather than retreating, many Asian markets have held their ground. Some, like Korea and Taiwan, have even delivered double-digit gains. This has surprised many observers but also revealed a shift in how markets - and investors - are responding to uncertainty.

Asia adapts, with eyes on the long term

Rather than reacting emotionally to every headline, investors seem increasingly focused on the underlying health of companies. Instead of assuming the worst, many are now weighing how much actual impact a political or policy event will have on company earnings, consumer behaviour, or business operations.

This shift in mindset may reflect what some are calling “crisis fatigue.” With a steady stream of global risks in recent years - from the pandemic to rate hikes and regional conflicts - investors are learning to distinguish between headline noise and real disruption. In doing so, they’re placing more emphasis on facts and fundamentals.

Why fundamentals are winning out

What’s helping Asia stand out is the resilience of its underlying companies. In Korea and Taiwan, for example, major firms in technology and semiconductors have benefited from global demand for artificial intelligence and digital infrastructure. We believe these are not short-lived trends, and investors are rewarding companies that continue to execute well despite external challenges.

India, meanwhile, offers a different kind of story. With a large and growing consumer base, many of its leading companies generate most of their revenues at home – making them less vulnerable to global trade disruptions. This domestic-driven growth story has attracted steady interest from both local and international investors. Although the recent announcement of an additional 25% US tariff on Indian goods has added a layer of complexity to the trade outlook, markets have remained largely unfazed – underscoring investor confidence in India’s long-term fundamentals and its relatively insulated equity landscape.

These examples highlight how different parts of Asia can perform well for different reasons. The common thread is that investors are digging deeper, assessing companies on their own merit, and responding to valuation opportunities created by short-term dislocations.

“The common thread is that investors are digging deeper, assessing companies on their own merit, and responding to valuation opportunities created by short-term dislocations.”

From tech powerhouses to domestic engines

Not every Asian market has rallied in the same way. Southeast Asian economies, for example, have been slower to recover, partly due to their lower exposure to high-growth tech sectors and their greater dependence on global trade, in our view.

But even in these markets, investors are finding company-specific opportunities – such as firms improving operations, gaining market share, or consolidating fragmented industries. These trends are harder to spot in headline news but easier to identify through patient, bottom-up research.

This is why diversification remains so important. Asia is not a single story. It is a broad and diverse region of many economies and industries, each moving at its own pace. By spreading exposure across countries and sectors, investors can manage risk more effectively and avoid overreliance on any one theme.

Looking through the macroeconomic fog

Forecasting what will happen next – whether it’s tariffs, interest rates, or geopolitical moves - is becoming increasingly difficult. Even when major events are predicted correctly, market reactions are not always logical or consistent.

Rather than trying to time political developments or policy shifts, many investors are now focusing on what they can control: understanding company quality, keeping watchlists of high-conviction names, and being ready to act when prices diverge from fundamentals.

The ability to stay prepared, rather than react on impulse, has become a key strength in navigating today’s environment.

Selective, steady and still growing

Within Asia, investors are identifying a wide range of opportunities that aren’t necessarily in the spotlight. These include telecom companies emerging from industry consolidation, consumer service providers gaining ground in urban centres, and manufacturing firms with pricing power and steady cash flow.

What makes these opportunities stand out is that they don’t rely on a change in the macro environment. They’re driven by local demand, good management, and clear strategies - not speculation about central banks or foreign policy.

While markets will continue to be influenced by global events, the region is increasingly defined by its ability to chart its own course. That makes Asia particularly attractive to long-term investors who value resilience, adaptability, and real business fundamentals.

Investing with conviction in a noisy world

Market volatility is unlikely to disappear. But its presence doesn’t mean investors need to retreat. Instead, what recent events have shown is that thoughtful, selective investing continues to work - especially when grounded in discipline and preparation.

Asia’s diverse economies and fast-evolving industries are providing a rich source of opportunities for those who are ready to look past the noise. For everyday investors, the message is clear: stay focused on the fundamentals, avoid overreacting to headlines, and consider the long-term potential that Asian equities continue to offer.

* This article was first published, in Chinese, in the Hong Kong Economic Journal.

The value of investments will fluctuate, which will cause prices to fall as well as rise and investors may not get back the original amount they invested. Past performance is not a guide to future performance. The views expressed in this document should not be taken as a recommendation, advice or forecast.