Goldman Sachs has indicated that Asian stocks have further growth potential following a strong rally in the first half of the year. The bank emphasizes the importance of diversifying into commodities, particularly copper and gold, as geopolitical tensions enhance long-term demand for metals and energy infrastructure.
In their second-half outlook for Asia, Goldman recommends investors concentrate on sectors that are expected to outperform, such as technology hardware, capital goods, and banks, particularly in North Asia, including South Korea, Taiwan, Japan, and China's A-share market.
The bank projects that the MSCI Asia Pacific ex-Japan Index could yield mid-teen returns, driven by significant earnings growth forecasts of 60% in 2026 and 22% in 2027. Goldman also notes that nearly 80% of the regional market's performance this year is attributable to earnings growth or revisions in earnings forecasts.
They advise against rotating into underperforming sectors and instead suggest focusing on structural winners in AI infrastructure, power generation, and defense. In terms of commodities, Goldman believes that the ongoing geopolitical tensions, particularly in the Strait of Hormuz, will reinforce demand for industrial metals, with copper expected to see demand outstrip supply for years.
The bank has raised its end-2026 copper price forecast to $13,735 per metric ton and anticipates that prices may need to reach around $15,000 by 2035 to encourage new supply. Additionally, Goldman maintains a bullish outlook on gold, forecasting prices to reach $4,900 an ounce by the end of 2026, supported by central bank purchases and diversification from traditional reserve assets