Goldman Sachs has upgraded its outlook on Indian equities, shifting to an overweight stance from its previous allocation. The Wall Street investment bank now expects earnings growth to drive a strong recovery in Asian shares next year, according to a Bloomberg report. Alongside India, Goldman Sachs has also upgraded Chinese H-shares to overweight, while downgrading Taiwan and China A-shares to market weight. The bank maintains its overweight ratings for South Korean and Japanese equities.
The MSCI Asia ex-Japan Index is projected to deliver a 19% return in US dollar terms in 2027, primarily driven by stronger corporate earnings. This forecast applies to the regional benchmark as a whole, not just Indian equities. Analysts led by Timothy Moe noted that recent market corrections have created more favorable entry points for investors, despite a slightly weaker outlook than previously anticipated. They highlighted attractive valuations across the region, though opportunities vary significantly between markets.
The MSCI Asia ex-Japan Index has fallen around 13% from its June record high, as investors reduced positions in technology stocks amid concerns over the sustainability of the artificial intelligence-led rally. Despite this correction, the index remains up approximately 11% in dollar terms this year, largely due to gains in South Korea and Taiwan.
Goldman Sachs cautioned that the path ahead could be volatile, with economic growth expected to moderate across much of Asia in 2027. Additional risks include potential further interest rate increases by the US Federal Reserve and uncertainty surrounding artificial intelligence investments. The bank also warned that elevated corporate and equity issuance could pressure market liquidity and increase funding costs, adding to the risks facing Asian markets.