Goldman Sachs(US:GS) Goldman Sachs·2025-03-25 02:20Investment Rating - The report maintains a constructive outlook on Asian equities with a target of MXAPJ 640, indicating a potential upside of 9% [1]. Core Views - The report emphasizes key themes such as AI beneficiaries, domestic exposure, defense spending, shareholder yield, and positive earnings revisions as focal points for investment [1][48]. - The report highlights the potential for better relative performance of Asian equities amid US economic concerns and tariff uncertainties [11][13]. Summary by Sections Tariffs - The upcoming April deadline for potential new tariffs is viewed as a critical risk window, with significant implications for Asian markets, particularly China and India [5][6]. - A 10% US universal tariff could lead to a 6-7% drop in the MXAPJ index, with Taiwan and Korea being the most affected [9][10]. US Economic Concerns - The report notes a reduction in the US GDP growth forecast to 1.7% for 2025, which may lead to a shift in investor focus towards Asian markets [11][12]. - The relative performance of cyclical stocks in Asia is improving compared to US defensives, indicating a potential shift in investment dynamics [13][14]. AI Sector - Chinese AI software-related stocks are outperforming regional hardware-related stocks, reflecting a shift in the investment narrative towards software applications [21][22]. China Outlook - The near-term outlook for China suggests a possible correction after a significant rally, with a target for the MXCN index set at 85, based on a 12x target P/E and 9% EPS growth for 2025 [27][28]. - Medium-term prospects for China are improving, supported by policy efforts to stabilize the economy and a shift towards technology and consumption [31][33]. Japan - Japan's investment case remains positive with a target of Topix 3100, despite concerns over yen strength impacting earnings [38][40]. India - The report suggests caution in re-engaging with India due to below-consensus GDP growth forecasts and ongoing EPS downgrades, although long-term prospects remain compelling [42][43]. Korea and Taiwan - Focus on alpha opportunities in Korea and Taiwan, particularly in high dividend stocks and potential rebounds in KOSDAQ performance [46][47]. Alpha Ideas - The report identifies several alpha themes, including AI applications, tariff-resilient stocks, defense spending, and quality stocks with strong balance sheets [50][51].