economy
Goldman Sachs says stick with Asia's winners, keep diversifying into commodities
Asian stocks still have room to run even after a blistering first-half rally, while investors should continue diversifying into commodities, said Goldman Sachs.
TL;DR
- Asian stocks have room for further gains following a strong first-half rally.
- Investors should continue diversifying into commodities like copper and gold.
- Structural themes such as AI, power infrastructure, and defense spending are driving both equity outperformance and commodity demand.
- Goldman Sachs recommends 'sticking with the winners' in Asian equities, favoring North Asia, South Korea, Taiwan, Japan, and China's domestic A-share market.
- Key sectors to focus on include technology hardware, capital goods, and banks, with a particular emphasis on the semiconductor memory supercycle.
- Goldman Sachs forecasts mid-teen returns for the MSCI Asia Pacific ex-Japan Index in the second half, supported by strong earnings growth projections.
- Geopolitical shocks reinforce long-term demand for metals and energy infrastructure, supporting commodity diversification.
- Demand for industrial metals like copper, lithium, and aluminum is expected to grow due to energy security, AI infrastructure, electrification, and higher defense spending.
- Goldman Sachs forecasts copper prices to continue rising, potentially reaching $15,000 by 2035.
- Gold remains a favored allocation due to sustained central bank buying and geopolitical risks, with a forecast of $4,900 an ounce by the end of 2026.