Analysts highlight overweight stock positions across India, Japan and Singapore, aiming to leverage strong domestic growth and manage exposure to geopolitical uncertainties.
Indian equities have dropped 6 per cent from the late September peak during the October to November market pullback, presenting an “attractive tactical” opportunity for entry, says Cheuk Wan Fan, chief investment officer at HSBC Global Private Banking and Wealth in Asia.
“We expect rural demand to recover in the coming months, supporting a rebound in domestic consumption and our forecast of 2025 Indian GDP growth of 6.5 per cent,” she says.
Consensus estimates project India to deliver robust earnings growth of 16 per cent in 2025 with a well-above regional average return on equity of 16 per cent.
“India continues to benefit from structural tailwinds of young demographics, rising middle-class consumers, strong foreign and domestic private investment flows, and a technology boom,” says Ms Fan.
HSBC focuses on the “domestic growth” leaders in consumption-related sectors. “We position in financials, consumer, real estate, infrastructure, and communication services stocks, which benefit from the resilient domestic fundamentals of the Indian and Asean economies,” says Hong Kong-based Ms Fan.
“In India, we prefer large-cap over small and mid-caps due to the former’s more attractive valuations,” she adds
Against a stronger US dollar, HSBC Global Private Banking holds a neutral view on the Indian rupee with support of high yields, low trade dependency and strong domestic resilience.
Trade tensions
India is also set to benefit from Donald Trump’s arrival at the White House. “India’s position is set to benefit from trade tensions between the US and China, and if the dispute escalates due to Trump’s tariff policies, India will be geopolitically favourable,” says Kunal Desai, portfolio manager at London-based GIB Asset Management, which manages more than $6bn in assets.
Mr Desai also believes “Indian exceptionalism” has helped its upward trajectory. Factors including the country’s monetary sovereignty, growing source of domestic risk capital, and diminished external vulnerabilities are “key reasons to be positive,” and initiatives such as ‘Make in India’ are a “major boon” for some Indian manufacturing companies.
In east Asia, a recovery of domestic consumption is projected for Japan due to its “sustained reflation” trend and “robust” wage growth, according to HSBC’s Ms Fan. “The accelerating corporate governance reforms continue to improve shareholder returns through increasing dividend payouts and share buybacks,” she says.
On top of this, the Bank of Japan’s “prudent” policy normalisation means HSBC favours the consumption and financial sectors that stand to benefit.
Singapore’s robust gains
Within the Asean region, Singapore has emerged as a “key beneficiary” of supply chain reorientation in Asia and the “China +1 strategy” adopted by many multinational corporations. This strategy involves diversifying supply chains to mitigate risks and maintain cost competitiveness.
Singapore’s equity valuations are “attractive” with support of positive earnings momentum driven by “robust” domestic growth. The primary driver behind these robust gains was better-than-expected earnings, particularly from sectors such as banking and industrials.
Key market players, including DBS, Yangzijiang Shipbuilding and SATS, delivered solid returns and positive growth surprises, underpinning sustained performance across sectors. Singapore’s compelling dividend yield of 4.2 per cent is among the highest in Asia. “Amid the global central bank easing cycle, high-yielding stock markets like Singapore attract investor demand,” says Ms Fan.
