J.P. Morgan has increased its allocation for Taiwan and the wider technology sector in its Asia equity strategy to overweight, while downgrading Indian equities to neutral. The bank cites an accelerating investment cycle in artificial intelligence (AI) and a stagflationary macroeconomic environment as pivotal factors influencing the regional outlook.
The bank adjusted its MXASJ base index targets to 1,200, 1,450, and 900 for bear, bull, and base cases, respectively. The Taiwan TWSE targets were raised to 43,000, 48,000, and 36,000. Among the leading technology picks in the region are TSMC, Samsung Electronics, SEMCO, Unimicron, IsuPetasys, Wiwynn, Alchip, GPTC, and ASMPT.
This strategic upgrade is driven by three primary factors: a surge in positive AI developments, notably from Anthropic, which saw its annual revenue rise from approximately $9 billion at the end of 2025 to about $30 billion by April 2026; significant price hikes in hardware across categories such as memory, substrates, packaging, networking, and cooling components; and a macroeconomic landscape now appearing more stagflationary rather than the previously optimistic “goldilocks” scenario.
The report emphasized the significant growth potential in global semiconductor spending, suggesting that if AI becomes as critical as defense or energy consumption, it would enhance investment in this sector.
In terms of sector allocation, Utilities have been upgraded to Neutral due to power generation demand linked to AI infrastructure. Conversely, Consumer Discretionary and Communication Services have both been downgraded to Neutral, reflecting stagnation and a lack of catalysts within China’s internet sector. Commodity-sensitive Staples were also lowered to Underweight. J.P. Morgan continues to maintain an Overweight stance on Korea, China, Energy, Materials, and Financials, while remaining Underweight on ASEAN and Healthcare.
For China, the bank has kept its end-2026 MXCN and CSI-300 targets unchanged at 100 and 5,200, respectively. A forthcoming summit between Trump and Xi is anticipated to provide a near-term boost. However, J.P. Morgan noted that improvements in consumer confidence, governance, and reflation are progressing slowly.
The report cautioned that widespread reflation could falter due to the necessity for household balance sheet repair, recommending selective investment in consumer sectors targeting younger demographics and high-quality Tier-1 CBD-focused real estate developers.
The downgrade regarding India reflects five significant headwinds. Valuations remain elevated, with India trading at a 65% premium to MSCI Emerging Markets, down from a peak of 109%. J.P. Morgan revised its earnings growth forecasts for MSCI India for calendar years 2026 and 2027 downward by 2% and 1%, respectively, to 11% and 13%. Analysts have also lowered fiscal year 2027 estimates by 2-10% across various sectors, including Consumer, Auto, Financials, and Oil Marketing Companies. Additionally, capital dilution from around $64 billion in IPO and Qualified Institutional Placement (QIP) issuances limits upside potential, and India’s large-cap index shows minimal exposure to AI, data centers, and semiconductors. Moreover, the India Meteorological Department has forecast the 2026 southwest monsoon at just 92% of the Long Period Average, coupled with the development of El Niño.
J.P. Morgan stated, “We see better opportunities elsewhere in Emerging Markets until valuations de-rate further or earnings visibility improves.” The bank’s targets for the Nifty 50 at year-end are now set at 30,000, 27,000, and 20,500 for bull, base, and bear cases, respectively. Within India, J.P. Morgan maintains an overweight position in Financials, Materials, Consumer Discretionary, Hospitals, Defense, and Power, while remaining underweight in IT and Pharma.
Published on April 24, 2026.
