India Poised for Strong Gains Amid Attractive Asian Markets: UBS Report

A UBS report finds Asian markets have attractive valuations, with India set for strong gains from rising corporate profits. The region is supported by AI capex, solid earnings, and a weaker USD, with robust APAC ex-Japan growth expected.

Asian equity markets are trading at attractive valuations, and amid this, India is poised for strong gains because of rising corporate profits as it continues to offer compelling opportunities compared to global peers, according to a report by UBS.

India's Strong Position Highlighted

Highlighting India, the report said the country stands out as one of the key beneficiaries in Asia, supported by improving business cycles and rising corporate profits. It stated, "Beyond mainland China, India should benefit from rising corporate profits".

Attractive Valuations and Regional Growth Drivers

The report adds that regional valuations remain appealing as Asian markets trade at a discount, supported by a benign macro outlook across the region and a weaker US dollar. It stated, "Positive AI capex developments across Asia are a growth tailwind, earnings growth is solid, and the breadth of revisions continues to improve. Regional valuations look appealing, trading at a discount to global peers."

The report also noted that beyond mainland China, India is positioned to benefit meaningfully from rising corporate profits, while Singapore is expected to gain from shareholder value initiatives and Hong Kong from lower interest rates. It said that AI innovation and robust spending are driving strong momentum. It added that for investors seeking diversification, broader exposure to Asia remains favourable due to improving trends in technology investment, solid earnings performance, and attractive valuations across the region.

APAC Forecast and Key Themes

The report expects APAC ex-Japan growth to remain robust at just under 5 per cent, though the year may see a softer start followed by a stronger finish in 2026 as lower interest rates begin to take effect. Key regional macro themes include the expanded build-out of technology supply chains, a domestic consumption upturn in Japan and India, and a revival in regional credit growth, which is set to benefit banks and consumer-related investment opportunities.

Global Outlook and Sector Preferences

On the global front, UBS expects economic growth to stay resilient and accelerate through the year. In the US, the preferred sectors include technology, utilities, and health care, while in Europe, industrials, technology, and utilities are favoured. In Asia, UBS maintains a preference for China, particularly tech, along with Japan, Hong Kong, Singapore, and India. Globally, the report also shared a positive outlook for banks.

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