Stuart Rumble

Consumer behaviour across developed markets in Asia, like mainland China, Hong Kong, Singapore and Taiwan, is undergoing a notable transformation, shaped in part by persistent economic uncertainty and a challenging macro environment. In many markets across the region, subdued growth, lingering market volatility, and concerns over employment stability have led to a discernible shift in spending patterns. Consumers are not only tightening their budgets – they are also seeking deeper emotional connections with the products and experiences they choose.

This behavioural pivot is evident across sectors. In food and beverage, for instance, the closure of high-profile restaurants and luxury dining venues reflects a retreat from high-ticket discretionary spending. Yet, the rise of supermarket dining and casual, affordable formats signals a reallocation of consumption rather than a wholesale contraction.

Consumers are prioritising value, but increasingly, they are also drawn to purchases that offer emotional resonance, cultural relevance, or a sense of identity. For example, many are gaining pleasure simply from opening a blind box from Pop Mart. For investors, these shifts present a complex mix of opportunity and risk. Brands that successfully tap into emotional value have demonstrated strong consumer engagement and, in many cases, robust equity performance. These companies have benefited from both top-line momentum and investor enthusiasm. However, sustaining this success requires continuous innovation, particularly in intellectual property and product development.

Valuations also remain a critical consideration. Several consumer-facing stocks are trading at elevated multiples, prompting questions about the durability of earnings growth and the potential for mean reversion. Investors must distinguish between transient trends and structural shifts. While the blind box phenomenon may fade, broader movements – such as the rise in health-conscious lifestyles and experience-led consumption – appear more enduring and merit closer attention.

Sectors such as sportswear and cosmetics offer more resilient long-term prospects. These industries benefit from favourable demographics, increasing urbanisation, and digital engagement. Local players, in particular, are gaining ground by leveraging social media and influencer-led marketing to accelerate product cycles and respond swiftly to consumer feedback, often outpacing global incumbents in agility and cultural alignment.

Digital channels are also reshaping the consumer-investor dynamic. Live-streaming commerce, social selling, and viral product launches are compressing the time between product conception and market adoption. Companies that can harness this velocity – especially those with deep local insight – are well-positioned to capture market share and investor interest. The success of Chinese electric vehicle brands in markets like Singapore underscores the disruptive potential of agile, consumer-centric business models.

However, the competitive intensity in markets such as China cannot be overstated. Success breeds imitation, and only firms with robust fundamentals, adaptive strategies, and clear differentiation will endure. Investors must pay close attention to management quality, innovation pipelines, and the ability to pivot in response to evolving consumer sentiment.

The changing consumer landscape in Asia reflects both economic caution and a search for emotional fulfilment. For investors, the challenge lies in identifying which behavioural shifts are cyclical and which are structural. Those who can navigate this complexity – by focusing on innovation, cultural relevance, and valuation discipline – will be best placed to capture the next wave of growth in the region’s dynamic consumer markets.

By Stuart Rumble, head of investment directing, Asia Pacific

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From a multi-asset investment perspective, a de-globalised world necessitates enhanced portfolio diversification.

The US has threatened to impose significant tariffs on several trading partners beginning on August 1st. The impacted countries are predominantly in Asia, notably Korea and Japan, but South Africa is also included. Such a move was not unexpected. Markets are understandably pricing a significant probability that this is again a negotiating tactic, and that a delay or ‘deal in principle’ is announced before the tariffs come into effect.

The uncertainty and reality of higher tariffs, slowing labour force growth, combined with the upward impact of fiscal deficits on interest rates, is expected to lead to subdued growth and sticky inflation in the US, and could cause investors to look outside of the US for areas with a resilient growth outlook and reasonable valuations.

Stuart Rumble, head of investment directing, APAC, Fidelity International, comments: “The idea of US exceptionalism has shaped the way investors allocate capital across global markets for at least a decade. Today, that assumption is being reassessed. A combination of shifting trade dynamics, fiscal uncertainty and evolving currency pressures is prompting investors to take a broader view of where to find sustainable sources of growth and income.

Recent fund flows suggest a quiet but deliberate rebalancing may be underway. Equity exposure is being reconsidered, with many investors looking to reallocate capital to markets such as Europe, Japan and other parts of Asia. Within portfolios, we are seeing a move to reduce reliance on large US technology firms and to increase diversification across sectors that offer comparable growth and quality characteristics at more attractive valuations, including growing interest in Asian equities aligned with strategic trends such as AI, energy transition, advanced manufacturing and domestic consumption.

In fixed income, there is increased interest in rotating toward high-grade sovereign bonds in Europe and Asia, along with rising appetite for local currency debt markets across the region. Currency strategies are also evolving. Where applicable, investors are considering the approach and timing of hedging their US dollar exposure and increasing allocations to other reserve currencies and those likely to benefit from regional repatriation flows.”

Joseph Zhang, portfolio manager, Fidelity International, comments: “The US equity market has been benefiting from a valuation premium compared to the rest of the world, a situation justified by its superior earnings growth, improving profit margins, and leadership in innovation. Additionally, the US bond market has attracted substantial capital owing to its market depth and liquidity, stable rule of law, and the US dollar’s status as a global reserve currency. This sense of “exceptionalism” has also bolstered the strength of the US dollar, as the surplus dollars from the twin deficits are reinvested into US financial assets.

Nevertheless, some significant changes are prompting global investors to reassess the sustainability of this “exceptionalism.” In a world characterised by de-globalisation and supply chain fragmentation, can US companies sustain their superior earnings growth and margins compared to the rest of the world, and as capital flows begin to shift, will the decade-long cycle of USD strengthening reverse? Ultimately, it raises the question of the appropriate level of “valuation premium” that should be attributed to US assets.

From a multi-asset investment perspective, a de-globalised world necessitates enhanced portfolio diversification, encompassing equity regional diversification, bond diversification, and currency diversification. For instance, whereas investors previously sought AI-related exposure primarily in the US market, they now have a wider array of opportunities to discover promising companies in Asia and China, often at more attractive valuations. In terms of fixed income, the de-synchronised rate cycle and attractive yield present good investment prospects in emerging market bonds. Improving currency diversification with non-USD exposure both in major DM currencies, selective EM currencies and gold also helped improve portfolio stability.”

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