Manulife sees Asian equities as attractive in second half of 2026

Manulife Investment Management believes the outlook for Asian equities remains attractive in the second half of 2026, supported by improving corporate earnings prospects, looser financial conditions, and various regional growth drivers.

Head of Asia Equities June Chua said the firm sees more sustainable earnings growth prospects in China over the next 12 to 18 months following a period of weakness. “As the economic recovery broadens and the industrial cycle stabilises, we continue to see opportunities in areas such as AI, semiconductors, advanced manufacturing, and electrical equipment. Combined with policy support and still-attractive valuations, this points to a more constructive backdrop for Chinese equities in the medium term,” Chua said in a statement on Friday.

Taiwan and South Korea are also expected to continue benefiting from strong momentum in the artificial intelligence ecosystem. Robust and resilient supply chains, along with ongoing technological upgrades, are seen driving earnings growth in the semiconductor sector and related industries.

In ASEAN, Chua noted that short-term challenges persist, but coordinated policy efforts and strengthening domestic demand are expected to support a more sustainable economic recovery. “Under these conditions, Asian equities offer differentiated sources of growth and diversification. However, performance dispersion across markets and sectors remains high, underscoring the importance of active investment management and a disciplined, selective approach to capturing opportunities in the region,” she said.

Meanwhile, Head of Asia Fixed Income Murray Collis predicted that Asian bonds will remain well-positioned in the second half of 2026 as investors seek income and diversification. He noted that Asian bonds offer a combination of higher yields and shorter duration compared to comparable global instruments. “This provides a more resilient income cushion against interest rate volatility. We see opportunities in US dollar-denominated Asian bonds and select local currency markets, where policy support and solid fundamentals can help underpin returns,” he said.

In credit instruments, Asian high-yield bonds stand out for offering attractive yield potential backed by improving fundamentals, while investment-grade bonds continue to be supported by healthy regional economic growth. In local currency bond markets, selectivity is key, with Japan and India seen as offering distinct opportunities as policy conditions and market dynamics favour movements in both interest rates and currencies.

Collis also noted that technical factors remain supportive for Asian bond markets, including limited net supply of US dollar bonds in the region, which helps underpin valuations. “Against this backdrop, Asian bonds remain well-positioned to deliver income and diversification, while offering relative resilience in the second half of 2026,” he said.

Manulife Investment Management concluded that portfolio management in the second half of 2026 will depend heavily on investors’ ability to adapt to diverging growth rates across regions and persistent inflationary conditions.