Can the Asia Equity Rally Continue?

North Asian markets currently navigate a complex landscape defined by geopolitical stability and a powerful semiconductor-driven AI super-cycle. The recent U.S.-China summit yielded a "no harm done" outcome, providing a welcome reprieve from heightened tensions. Within China, a significant performance divergence exists between onshore A-shares, bolstered by upstream manufacturing earnings, and offshore H-shares, which struggle with weaker tech-sector results. Meanwhile, Korea and Taiwan lead regional outperformance, fueled by insatiable demand for memory chips as the AI economy scales toward 2030. Japan remains attractive due to political stability, corporate governance reforms, and favorable domestic investment flows. Despite this momentum, investors face concentration risks in tech-heavy indices and potential vulnerabilities to energy supply shocks stemming from ongoing Middle East conflicts. Tim Moe, Chief Asia-Pacific Regional Equity Strategist at Goldman Sachs, emphasizes that while the long-term outlook remains constructive, short-term market volatility necessitates careful hedging.