Asian markets such as China, Japan and India have outperformed other global equity markets this year due to a variety of both fiscal and industry-specific developments, according to an international fund manager.
Fidelity International portfolio manager George Efstathopoulos said China has been one of the best-performing equity markets in 2025 due to the emergence of artificial intelligence (AI), in particular the private start-up Deepseek China, which challenged the view it fell vastly behind the United States on the technology front.
“We believe that Chinese AI can help drive earnings, productivity and even help on the employment front,” Efstathopoulos forecast.
He predicted capital expenditure would continue to grow in this space and further boost earnings, with onshore mid-caps being the beneficiaries.
In addition, the manager cited Japan as another Asian nation holding a strong economic disposition whereby its localised equities drew interest.
“One of the remarkable aspects of Japan’s current economic scenario is its growth trajectory. Japan, alongside the United States, is one of few markets that have returned to their pre-pandemic GDP (gross domestic product) trend growth,” Efstathopoulos acknowledged.
“Positive earnings revisions are more prominent in Japan compared to other developed market equities, making them an attractive investment option.
“When examined through the lens of the price-to-earnings ratio, Japanese equities appear relatively cheap, further enhancing their appeal.”
Further, he identified corporate reform as another influencing factor making allocations to Japanese companies more attractive.
“The government and regulatory bodies have introduced measures to improve corporate governance standards, including the stewardship code and the corporate governance code. This push for reform is partly due to global competitive pressures and the desire to attract foreign investment, which is seen as crucial for Japan’s economy,” he noted.
With regard to India, Fidelity International portfolio manager Amit Goel noted this emerging market had experienced a multi-year upward run over the past five years due to robust earnings and consistent flows from domestic investors.
While this has resulted in high stock values compared to the rest of Asia and other emerging markets, Goel recognised this situation is now being rectified.
“We continue to believe that the ongoing rebalancing of the economy may still have some way to go. With risk of further slowdown in GDP, it is important to remain cautious and selective, particularly in the more expensive parts of the markets, such as consumer, industrial and utility sectors. However, there are areas of opportunities not to be missed,” he said.
He pointed to large banks, healthcare and information technology services as the sectors offering the best investment opportunities, along with high-quality growth companies, as valuations become more accurate.
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