Standard Chartered is doubling down on North Asian equities over Southeast Asia for the second half of 2026, while identifying compelling AI opportunities in the US IPO pipeline.

For 2H26, the bank has upgraded Asia ex-Japan equities to overweight, citing compelling valuations relative to global markets and superior earnings-per-share growth compared to major regions.

North Asian markets, such as Taiwan and mainland China, stand out due to their exposure to AI-driven capital expenditure and technological innovation, Steve Brice, global chief investment officer at Standard Chartered, noted.

“In Korea and Taiwan, the local semiconductor stocks are unsurprisingly a source of huge interest at the moment,” Brice told Asian Private Banker.

Taiwan remains a core conviction for the bank, supported by sustained demand for advanced semiconductors. Standard Chartered also sees scope for further upside in China, thanks to valuation re-rating potential following a prolonged period of market weakness.

“Naturally, China is also a key focus for our clients, especially those based in North Asia. Of course, this is periodically hit when the market is weak, but it does not take much to stir investor appetite against, given the potential for very sharp gains when sentiment turns,” Brice said.

Elsewhere in Asia, Standard Chartered remains constructive on Indian equities, supported by resilient domestic growth and a more favourable outlook for energy prices.

Meanwhile, the bank remains underweight on Southeast Asian equities, given their relatively muted earnings growth and lack of meaningful exposure to the technology sector, which has been driving returns elsewhere in Asia.

“We prefer North Asian stocks to Southeast Asian stocks,” Brice said, noting that pockets of opportunities can still be found in the region. For instance, in Singapore, investors continue to gravitate towards income-generating assets such as REITs (real estate investment trusts) and banks, he noted.

US IPO and equity raises

Despite the growing enthusiasm for Asian opportunities, Brice noted that clients across Asia, Africa and the Middle East are “generally most comfortable” with US equities.

One of the reasons for this is its long-term outperformance since the global financial crisis, Brice said. Other factors, such as the “preference for technology stocks – where the US is a global leader in both innovation and its monetisation – and the good market liquidity and corporate governance,” also contribute to the asset class being a preferred portfolio addition.

Standard Chartered remains overweight on US equities, given that earnings remained robust through the Middle East crisis. The technology sector led earnings growth, with companies running lean and adopting AI solutions, the bank noted.

Year-to-date, the S&P500 rose 7.39%, the Dow Jones Industrial Average by 6.79%, while the tech-heavy Nasdaq 100 jumped 16.43%.

Besides the heavy gains, investors are also waiting for major US listings, following the historic debut of space-tech giant SpaceX. Among the larger listings expected are ChatGPT developer OpenAI and AI pure-play Anthropic. Additionally, Google parent Alphabet has plans for an US$80 billion equity raise, including investments from Warren Buffett’s Berkshire Hathaway.

“So far, that’s been digested pretty easily, but the question is to what extent markets will digest that. We’re pretty confident that it might lead to short-term volatility, but it’s not going to be cycle-defining [or] anything like that,” Brice noted.

Strategic, tactical overweight on gold

Beyond equities, Standard Chartered remains constructive on gold, maintaining both strategic and tactical overweight positions.

The bank is allocating approximately 6% to the precious metal in its long-only portfolios – higher than the typical 2-3% – given central bank demand and falling real yields, Brice noted. He added that bullion also serves as a portfolio hedge in some downside scenarios, including stagflation.

Standard Chartered expects gold prices to be positively impacted by long-term diversification demand from emerging-market central banks.

Within fixed income, the bank is overweight emerging-market US-dollar-denominated bonds over local-currency debt, citing attractive yields, improving fundamentals and lower currency-related volatility.

Watch oil, energy prices

Looking ahead to the second half of the year, Brice and the Standard Chartered team are “relatively optimistic” about investor positioning.

The bank continues to expect a soft landing with a chance of strong growth re-acceleration despite recession and stagflation risks.

“The risk of a modest pullback in the coming weeks remains elevated. However, our 1-3 month equity models and reversal indicators remain positive, encouraging us to buy any temporary dips,” Standard Chartered’s analysts wrote in their H2 outlook report.

Key areas to watch include energy and oil prices, which peaked at US$120 a barrel before tapering down to just below US$80 a barrel recently, Brice said.

He’s also keeping an eye on central banks, with markets being “too hawkish” on rate decisions. His expectation is that the US Federal Reserve will hold interest rates for the rest of the year and cut them in the second quarter next year.

Investors often use the rear view mirror when projecting into the future, Brice observed, adding that the bank’s priority is to “try and help investors stay the course and stay invested.”

This involves a two-pronged strategy: “One is making sure their portfolios are appropriate for them ahead of time, but also then trying to reassure them when things are going through a bit of a bubble or correction,” Brice said.