The recent rally in Taiwan’s stock market record-high rally is underpinned not only by robust economic growth but also driven by continued upward revisions to corporate earnings. The TAIEX is expected to hit 37,500 points as its peak for this year. However, with US tech and semi stocks undergoing corrections, investors should remain vigilant against any near-term pullbacks. Trading strategies should avoid chasing highs and instead focus on selectively positioning in quality stocks during any pullbacks. The current Middle East military conflict has pressurized global stock markets, including in Hong Kong. A prolonged conflict would damage the global economy due to rising energy and commodity prices. Amid such a backdrop, oil and gold related stocks would be the preferred choices. Soaring sea freight rates will also benefit shipping stocks. Our base case Hang Seng Index target is 27,212 for 2026. In the short run, China’s A-share market will likely be dominated by geopolitical disturbances and favorable policies to be released at National Two Sessions, with all eyes on the situation in the Strait of Hormuz. We suggest focusing on three areas: 1) Oil and gas /shipping/nonferrous metals sectors benefitting from geopolitical tensions and supply-demand resonance; 2) Memory and glass fiber sectors profiting from the AI boom; and 3) Policy-supported future industries, such as low-altitude economy and embodied AI.

For March, in Korea we advise keeping an eye on leading stocks in 2026 (winners amid the macroeconomic Goldilocks and interest rate steepening phase), oversold stocks with earnings momentum, Corporate Value-up plays (top stocks highly sensitive to share cancellation events and best-in-class shareholder return names), US macro play materials/parts/equipment stocks, and earnings-driven KOSDAQ stocks sensitive to ETF fund flows. Related sectors include semiconductors, the heavy industries/capital goods value chain, securities, display, and bio.

For Indonesia, with heightened FX volatility, we expect negative to neutral sentiment toward the equity market. We expect the IDX to trade within the range of 7,700-8,000, and that it will see further correction. Thailand’s SET has already declined 4% on its first trading day in March (closing at 1,466.51 points), we do not expect much further downside to the index as it is expected that uncertainty is mostly factored into the decline. Thus, the SET trading range for March is expected to be 1,420-1,540 points. It is expected that high yield sectors, such as Banking and Telecommunications will continue to outperform the market in such a volatile environment. For Vietnam, we note global dynamics are unlikely to favor emerging markets in the very short term, as knee-jerk risk-off trades following the weekend attacks in Iran are very likely to be positive for the USD (likely a short-term move) and oil (maybe stronger for longer). The VNI traded back up toward its historical highs of 1900-plus a week ago, but this now looks like a double-top with the index falling to 1818 as of March 4. Given the potential macro negatives of a protracted war in the Middle East and high brokerage loan leverage in the Vietnam stock market, we believe that the external geopolitical situation warrants some level of investor caution in the days ahead (albeit O&G stocks may continue to benefit).

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