Goldman Sachs upgraded its outlook on India to overweight, forecasting a 19% return for the MSCI Asia ex-Japan Index in 2027. Analysts said, “Valuations are attractive with wide intraregional variation.” While the bank expects earnings growth to drive returns, it warned that uncertainty over artificial intelligence could fuel market volatility.
Goldman Sachs expects earnings growth to drive a 19% return for the MSCI Asia ex-Japan Index in dollar terms next year, even as it warned that uncertainty over artificial intelligence could fuel volatility.
The bank upgraded its outlook on China H-shares and India to overweight, while cutting China A-shares and Taiwan to market weight to balance its exposure to AI. It kept its overweight view on South Korea and Japan.
“Market drawdowns in 2H26 have priced a less favorable, but still good, investment backdrop in 2027,” analysts led by Timothy Moe wrote in a report on Saturday. “Valuations are attractive with wide intraregional variation.”
The MSCI Asia ex-Japan gauge has lost about 13% since reaching a record in June as unwinding AI trades battered some of the region’s biggest technology markets. The index is still up about 11% in dollar terms this year, with gains driven in large part by rallies in South Korea and Taiwan.
The analysts expect most Asian economies to slow next year as further Federal Reserve rate increases pose risks to growth.
“AI capex should rise further but growth is likely to peak, as markets have stopped rewarding higher spending and credit stress persists,” they wrote in a separate note. “Record credit issuance and still-high equity issuance could tighten liquidity and raise funding costs.”