From "safe haven" to "growth engine": Asian technology stocks attract billions of dollars in foreign capital, Fidelity and Nomura both exclaiming "outperforming the US".

As the confidence of investors in Asia's central role in the prosperity of artificial intelligence continues to grow, they are re-embracing their pre-war strategy - betting on Asian stocks outperforming their American counterparts. Institutions such as Fidelity International, Nomura International Wealth Management, and JPMorgan strategists have reiterated their bullish stance on Asia, pointing out that the optimism driven by artificial intelligence, more attractive valuation levels, and stronger profit potential are key factors supporting this assessment. At the beginning of the Iran war outbreak, Asian stock markets initially lagged behind the US stock market, but have since rebounded strongly. The MSCI Asia Pacific Index soared 14% this month, outperforming the S&P 500 Index's gain of 9.9%. The resilience of Asian tech companies like Asia Tech Hub Group, Inc. Class A indicates an increasing decoupling of the artificial intelligence capital expenditure cycle from the overall business cycle, attracting investors to industries with clear profit visibility. Chart 1 Charu Chanana, Chief Investment Strategist at Shen Bao Bank, said, "Asia's relative performance compared to the US is becoming a more credible story. Despite the lack of lasting macroeconomic consensus, funds still need to flow into trustworthy areas - currently, artificial intelligence is this area, and Asia is still the core pillar of this field." The increasing credibility of Asia's outperformance of the US stock market is due to a significant widening gap in earnings growth expectations between the two regions. Analysts expect earnings per share for the next 12 months for the South Korea KOSPI Index and the Taiwan TAIEX Index to surge by 212% and 58%, respectively, far exceeding the S&P 500 Index's growth expectation of 24%. However, even as Asian stock markets have experienced a breakthrough surge, the region remains a "value investment target" with a forward P/E ratio of only 14 times, much lower than the 21 times of the US stock market. Moreover, in April, excluding China, Asian emerging market stocks received approximately $13 billion in foreign capital inflows, making the region poised to see the largest monthly inflow in over two years. Recent financial reports have reinforced this narrative: chip manufacturers like SK Hynix, Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US), and Samsung Electronics have all released impressive performances due to strong AI demand, while China's latest DeepSeek model has boosted optimism for technological breakthroughs. BNP Paribas expects the strong performance of the technology sector to continue throughout 2026, with a preference for markets in Northeast Asia until the slowdown in growth becomes more evident in profit forecasts. Additionally, the dampening of geopolitical tensions by GEO Group Inc. has also been a key factor in shaping this trend. While shipping disruptions in the Strait of Hormuz once caused drastic fluctuations in the energy market, investors have gradually digested expectations of extreme risk amid diplomatic maneuvering. The latest research reports from institutions like Nomura International Wealth Management show that the market focus has shifted from risk aversion caused by GEO Group Inc. to a renewed focus on corporate fundamentals and technological innovation. In particular, the recent breakthrough of the Japanese stock market beyond the historic milestone of 60,000 points further validates the internal growth momentum of core Asian markets in corporate governance reforms and tech exports, attracting positions that originally flowed into defensive sectors of US stocks. While the outlook for Asian stock markets is positive, risks still exist. The MSCI Asia benchmark index has not yet fully regained ground lost since the Iran conflict, even as the S&P 500 Index has reached new highs. Investors are also cautious about the region's dependence on mega-cap companies, making this rally very sensitive to the financial performance of US tech giants, including Alphabet Inc. Class C (GOOGL.US), Amazon.com, Inc. (AMZN.US), Meta Platforms (META.US), and Microsoft Corporation (MSFT.US). So far, there are few signs of contraction in AI capital expenditures. Major cloud companies continue to signal ongoing investments in servers, data centers, and AI computing power. This helps explain why investors are increasingly willing to look past short-term risks towards the long term. George Efstathopoulos, Portfolio Manager at Fidelity International, pointed out, "The North Asian region seems to be in a more favorable position. While US economic growth remains robust, capital is being reallocated - reducing stock buybacks and increasing investments, with most of it flowing to Asian supply chains, such as mid-cap stocks in China and storage chip companies in Korea." Chart 2 The weakness of the US dollar is a positive factor for Asian stock markets. Ronald Tan, Chief Market Strategist at Lazada, predicts that as the conflict nears its end, non-US stock markets will rise, as pre-war trends such as a weak US dollar may reappear, driving their performance beyond that of the US stock market. Invesco Ltd. also holds a similar viewpoint. Julia Wang, Chief Investment Officer for North Asia at Nomura International Wealth Management, stated that in the medium term, "Given that Asia is in the next stage of technological development in the physical AI field, its performance should still outperform that of the US," and this trend may continue for three months or longer.