J.P. Morgan has raised its Asia equity strategy allocation for Taiwan and the broader technology sector to overweight, while downgrading Indian equities to neutral, citing an accelerating AI investment cycle and a stagflationary macro backdrop as the twin forces reshaping the regional outlook.
The bank raised its MXASJ base, bull and bear case index targets to 1,200, 1,450 and 900 respectively, and lifted its Taiwan TWSE targets to 43,000, 48,000 and 36,000. J.P. Morgan’s top tech picks across the region include TSMC, Samsung Electronics, SEMCO, Unimicron, IsuPetasys, Wiwynn, Alchip, GPTC and ASMPT.
The upgrade is driven by three factors: better AI news flow, particularly from Anthropic, whose annualised revenue reportedly surged from around $9 billion at end-2025 to roughly $30 billion in April 2026; cascading hardware pricing increases across memory, substrates, packaging, networking and cooling components; and a deteriorating macro backdrop that now more closely resembles stagflation than the “goldilocks” environment seen before the West Asia conflict.
…”If AI is becoming anything as existential as defence or energy consumption, global semiconductor spending has a lot of room to grow,” the report noted.
On sector allocation, Utilities were raised to Neutral on the back of power generation demand tied to AI infrastructure. Consumer Discretionary and Communication Services were both cut to Neutral, reflecting stalled momentum and a lack of catalysts in China’s internet sector. Commodity-sensitive Staples were lowered to Underweight. J.P. Morgan remains Overweight on Korea, China, Energy, Materials and Financials, and Underweight on ASEAN and Healthcare.
For China, J.P. Morgan kept its end-2026 MXCN and CSI-300 targets unchanged at 100 and 5,200. An upcoming Trump-Xi summit is expected to provide a near-term tailwind, though the bank flagged that fundamental repair across consumer confidence, governance and reflation remains slow.
…”Broad-based reflation could stall on household balance sheet repair,” the report said, recommending selective positioning in consumer names exposed to younger-generation health trends and high-quality Tier-1 CBD-focused property developers.
The India downgrade reflects five headwinds. Valuations remain stretched, with India still trading at a 65% premium to MSCI EM, even after compressing from a 109% peak. J.P. Morgan cut its CY26 and CY27 MSCI India earnings growth forecasts by 2 per cent and 1 per cent to 11 per cent and 13 per cent respectively, after sector analysts trimmed FY27 estimates by 2–10 per cent across Consumer, Auto, Financials and OMCs. Capital dilution from approximately $64 billion in IPO and QIP issuance is capping the upside. India’s large-cap index also has minimal exposure to AI, datacentres and semi-conductors. Finally, the IMD has forecast the 2026 southwest monsoon at just 92 per cent of the Long Period Average, with El Niño developing.
…”We see better opportunities elsewhere in EM until valuations de-rate further or earnings visibility improves,” J.P. Morgan said. The bank’s Nifty 50 year-end bull, base and bear case targets now stand at 30,000, 27,000 and 20,500. Within India, J.P. Morgan remains overweight Financials, Materials, Consumer Discretionary, Hospitals, Defense and Power, and underweight IT and Pharma.