China is particularly interesting because we are seeing significant developments in AI.
China is emerging as one of the most underappreciated opportunities in Asian equities as investors broaden beyond the region’s established AI and semiconductor leaders, according to Aberdeen Investments.
Pruksa Iamthongthong, head of APAC equities at Aberdeen Investments, said investors remained positive on Asia’s AI-driven growth story but were becoming more selective on valuations and looking beyond a small group of technology champions.
“Investors haven’t rotated away from Asia’s AI winners, but they are broadening their exposure across the ecosystem and becoming more selective about valuation and positioning,” said Iamthongthong.
“We are seeing opportunities beyond the obvious AI leaders, particularly where fundamentals are improving faster than market expectations. China is particularly interesting because we are seeing significant developments in AI, advanced manufacturing and innovation, while global investor positioning remains cautious.”
More than 80 per cent of China Fortune 500 companies have begun adopting AI, while Chinese AI capital expenditure is expected to reach US$116 billion in 2026, up from US$89 billion in 2025[1].
Iamthongthong said investor sentiment towards China remained dominated by concerns around property and domestic consumption, potentially overlooking the strength of its technology and industrial sectors.
“Some of the most exciting developments in China are happening across AI, semiconductors, automation, software and advanced manufacturing,” she said.
“Yet global investors remain underweight China. We see a compelling gap between improving fundamentals and investor positioning, with valuations still undemanding.”
Taiwan is also one of Aberdeen’s highest-conviction markets with opportunities across the broader AI supply chain, including advanced packaging, connectivity, semiconductor equipment and networking.
“Taiwan remains one of the clearest ways to gain exposure to the structural growth in AI and technology spending globally.
“We particularly like the ‘picks and shovels’ of AI – the companies providing the critical infrastructure and enabling technologies required for the next stage of AI adoption.”
Korea remains a preferred market, with opportunities extending beyond semiconductors into industrial and shipping businesses benefiting from power-grid investment, electrification and the energy transition.
“Korea offers an interesting combination of AI-driven earnings growth and improving capital discipline. We are seeing stronger dividends, better capital allocation and a greater focus on shareholder returns.”
Iamthongthong said the next phase of the Asian equity story would require investors to look beyond broad market exposure and focus on companies where fundamentals were improving faster than market expectations.
“We are looking for companies where fundamentals are improving faster than market expectations, while remaining disciplined on valuation and position size,” she said.
“In Taiwan, that means AI infrastructure and companies with strong earnings visibility. In Korea, it means businesses benefiting from the memory cycle, industrial policy and improving capital discipline. In China, we see opportunities where innovation, AI adoption and advanced manufacturing are translating into stronger earnings potential.”
While the outlook remains constructive, Iamthongthong said key risks included a sharper-than-expected slowdown in the US, a pullback in AI capital expenditure or semiconductor demand, changes in China’s growth trajectory, currency volatility and geopolitical tensions, particularly around US-China relations and Taiwan.
“AI remains an important structural driver for Asia, but we are moving into a phase where investors need to look beyond the obvious winners.
“We believe the next opportunities will come from identifying companies where structural growth, improving fundamentals and attractive valuations come together, and that is where active stock selection becomes increasingly important.”