Considering the risks for Asia stocks after a strong run in global markets

Asia ex-Japan equities should remain attractive over the long term, but returns are likely to be more volatile and less powerful over the next six to nine months as the global cycle matures.

• The FTSE All World Index rose 77% in the three years to August 2026, while higher bond yields, oil above $100 a barrel and unresolved conflicts in the Middle East and Ukraine are raising inflation and interest-rate risks.
• The US midterm elections in November, the French election in April, elevated French government and corporate debt, and possible El Niño-related disruptions could add volatility to rates, currencies, food prices and equity markets.
• Jupiter has slightly reduced the risk profile of its Asia ex-Japan equity income strategy and seeks resilience through diversification across countries, sectors, markets and companies; nine of its 25 holdings are in a net cash position.
• The strategy invests in Taiwan, Australia, Singapore, India and South Korea, combining exposure to US and global demand with domestic consumption in India, Southeast Asia and Australia.
• Technology is the largest sector, with earnings expected to grow through 2027 and into early 2028, while financials benefit from loan demand and low credit risk; Asia Pacific ex-Japan equities trade near their 20-year average price-to-earnings multiple.

Takeaway: Investors should expect corrections and less straightforward returns, but the authors remain cautiously optimistic on Asia Pacific ex-Japan equities into 2027, supported by resilient balance sheets, technology and financials, with a Middle East resolution offering an upside scenario through lower energy prices and inflation.