Singapore – The record-breaking rally in Asian stocks is set to come under increasing pressure as US President Donald Trump\u2019s tariff hikes start to sap earnings, some of the region\u2019s biggest funds say.<\/p>\n
Markets are underestimating the impact on company profits of the higher US levies that are likely to crimp exports in coming months, according to T. Rowe Price Group and Franklin Templeton, among others. <\/p>\n
Shares in export-reliant South Korea and Taiwan are among the most vulnerable, they say.<\/p>\n
\u201cCurrent earnings and margins for exporters have not yet fully reflected the impact of the recent tariff agreements,\u201d said Mr Clarence Li, a senior portfolio analyst in the equity division of T. Rowe Price in Hong Kong. <\/p>\n
\u201cOur Asia and emerging market portfolios have reduced exposure to businesses that are heavily reliant on foreign exports as part of our risk management strategy.\u201d\u00a0<\/p>\n
Asian stocks have powered ahead in 2025, with MSCI\u2019s regional gauge surging more than 20 per cent in 2025, outpacing the gain of about 12 per cent in the S&P 500 Index. <\/p>\n
The Asian benchmark this week surpassed its previous all-time high set in early 2021, helped by abundant liquidity, a weaker dollar and an artificial-intelligence boom.<\/p>\n
The higher US tariffs \u2013 first announced by Mr Trump in April \u2013 are heavily weighted against economies that have trade surpluses with the United States, many of which are in Asia. <\/p>\n
The current levies include 34 per cent on China, 50 per cent on India, 19 per cent on Indonesia and 15 per cent on Japan.\u00a0<\/p>\n
While US tariffs have surged, analyst estimated earnings for the MSCI Emerging Markets Index have declined only about 3 per cent in 2025, according to Bloomberg Intelligence.\u00a0<\/p>\n
The current forecasts are too optimistic, according to BNP Paribas.<\/p>\n
\u201cWe do not believe tariff-related risks to forward earnings have been incorporated into forward earnings expectations and\/or valuations,\u201d said Dr William Bratton, head of Asia-Pacific cash equity research at the French bank in Hong Kong. \u201cWe see continued risk of Asia\u2019s export earnings materializing below current forecasts.\u201d\u00a0<\/p>\n
Dr Bratton said he\u2019s most cautious about earnings from the export-orientated sub-industries in Northeast Asia, namely Japan, South Korea and Taiwan.<\/p>\n
Asia is particularly heavily exposed to the US as a source of export income, with more than US$1.3 trillion of goods shipped from the region to the world\u2019s biggest economy in 2024, according to data from the US census bureau. <\/p>\n
China alone exported US$438.9 billion, Vietnam US$136.6 billion and South Korea US$131.5 billion.<\/p>\n
The risk to corporate earnings extends beyond headline tariffs to incorporate factors that will not immediately show up on balance sheets, such as supply chain disruptions, Ms Christy Tan, an investment strategist at Franklin Templeton in Singapore.<\/p>\n
\u201cInvestors are expected to stay cautious over export-oriented companies and those exposed to tech sectors, as margin compression could be increasingly evident in months to come,\u201d she said.<\/p>\n
It is not all doom and gloom for Asia though, due to potential positives that may counteract the blow from higher tariffs. <\/p>\n
These include expectations for central bank interest rate cuts, kicked off by the US Federal Reserve\u2019s widely anticipated decision this week to resume policy easing.<\/p>\n
Asian economic data has also shown surprising resilience to the tariff hikes so far. <\/p>\n
Readings of manufacturing activity in recent weeks have revealed order books are growing from Thailand to Vietnam, while South Korean exports held up in August, and Thai shipments grew by double digits in July.<\/p>\n
Some fund managers though put that down to front-loading of exports in advance of the tariffs, and expect a greater impact after that process wears out.<\/p>\n
One sector they say is particularly at risk from tariffs is technology, which has been among Asia\u2019s best performers in 2025.<\/p>\n
\u201cThere are concerns over potential tariffs on the semiconductor sector, which could weigh on Asia, given that it\u2019s the centre of the global semiconductor supply chain,\u201d said Mr Jerry Goh, investment director for Asian equities at Aberdeen Investments in Singapore. <\/p>\n
Taiwan and Korea would see among the biggest earnings risks due to their heavy reliance on the industry, he said. BLOOMBERG<\/p>\n","protected":false},"excerpt":{"rendered":"Singapore – The record-breaking rally in Asian stocks is set to come under increasing pressure as US President…\n","protected":false},"author":2,"featured_media":20914,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[114,85,46,190],"class_list":["post-20913","post","type-post","status-publish","format-standard","has-post-thumbnail","category-markets","tag-business","tag-il","tag-israel","tag-markets"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/20913","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=20913"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/20913\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/20914"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=20913"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=20913"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=20913"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}