'Very constructive' on Asia in 2026, with Chinese stocks tipped for 20% gains: Goldman Sachs

Geoeconomic Trends - Geoeconomics are increasingly influencing business leaders and investors, leading to a reality check on managing uncertainty while focusing on long-term trends [1] - Despite geopolitical noise, markets and businesses are progressing, with the global economy expected to grow at around 2.9% entering 2026 [2][3] Capital Flows and Regional Focus - There is a noticeable shift in capital flows towards Asia, particularly China, India, Japan, and Korea, driven by technological advancements and resilient economies [5][6] - The incremental investment decisions are increasingly favoring Asia without a significant rotation out of the United States [7] Market Performance in North Asia - Korea's market has reached historic highs, with the Kospi index surpassing 5,000, benefiting from geopolitical tailwinds and advancements in technology, especially in the semiconductor sector [8][9] - Taiwan is experiencing renewed confidence in its technology sector, while Japan is focusing on corporate governance reforms to enhance market activity [10][11] Economic Growth Projections - China’s GDP growth is projected at 4.8%, supported by a strong export model and record trade surplus of $1.2 trillion [16][18] - The sluggishness in the property sector remains a drag on growth but is diminishing over time, with expectations of reduced impact in the coming years [19][20] Hong Kong Market Activity - Hong Kong has seen a significant increase in IPO activity, raising $37 billion last year, with over 300 companies in the pipeline for this year [23][24] - The market is currently able to digest new capital, supported by strong aftermarket performance of IPOs and substantial liquidity from the South Connect [25][26] M&A Outlook - The M&A landscape is expected to be constructive in 2026, driven by financing for mega deals, interest in AI, and favorable credit conditions [27][28] - Corporate activity is a key driver of M&A, with expectations of increased participation from sponsors in the near future [30][31]